China Energy Development Holdings Limited — Proxy Solicitation & Information Statement 2003

Nov 24, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular or as to the action you should take, 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 Hon Po Group (Lobster King) 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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Hon Po Group (Lobster King) Limited

(incorporated in the Cayman Islands with limited liability)

GENERAL MANDATES TO ISSUE AND TO REPURCHASE SHARES

A notice convening an annual general meeting of Hon Po Group (Lobster King) Limited to be held at Hon Po Seafood Restaurant, 482 Castle Peak Road, Kwai Chung, New Territories on Thursday, 18 December 2003 at 4:00 p.m. is contained in the Annual Report 2002 of the Company. Shareholders are advised to read the notice and to complete and return the form of proxy enclosed with the Annual Report 2002 in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the Annual General Meheting or any adjourned meeting. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjourned meeting should you so desire.

19 November 2003

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix – Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6

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DEFINITIONS

In this circular, the following expressions have the following meanings unless the context requires otherwise:

“Annual General Meeting” the annual general meeting of the Company to be held at Hon Po Seafood Restaurant, 482 Castle Peak Road, Kwai Chung, New Territories on Thursday, 18 December 2003 at 4:00 p.m., notice of which is contained in the Annual Report 2002 of the Company

• “Annual Report 2002” the annual report of the Company for the year ended 31 December 2002

• “Company” Hon Po Group (Lobster King) Limited, a company incorporated in the Cayman Islands with limited liability

• “Directors” the directors of the Company

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “Latest Practicable Date” 6 November 2003, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

“Relevant Period” means the period from the passing of the resolution concerned until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company; or

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by any applicable law or Cayman Islands Law or the existing articles of association to be held; or

• (iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the Directors by the resolution concerned

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DEFINITIONS

“Repurchase Mandate” a general mandate proposed to be granted to the Directors to exercise all the powers of the Company to repurchase Shares in the manner as set out in this circular “Rights Issue” means the allotment or issue of Shares in the Company or other securities which would or might require Shares to be allotted and issued pursuant to an offer made to all the shareholders of the Company (excluding for such purpose any shareholder who is resident in a place where such offer is not permitted under the laws of that place) and, where appropriate, the holders of other equity securities of the Company entitled to such offer, pro rata (apart from fractional entitlements) to their existing holdings of Shares or such other equity securities “Share(s)” share(s) of HK$0.01 each in the capital of the Company “Shareholder(s)” shareholder(s) of the Company “Share Issue Mandate” a general mandate proposed to be granted to the Directors to allot, issue and deal with new Shares in the manner as set out in this circular “Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Code” Hong Kong Code on Takeovers and Mergers

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LETTER FROM THE CHAIRMAN

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Hon Po Group (Lobster King) Limited

(incorporated in the Cayman Islands with limited liability)

Executive Directors:

Mr. Cheung To Sang (Chairman and Managing Director) Mr. Chan Nun Chiu (Deputy Chairman) Mrs. Cheung Lim Mai Tak, Grace Mr. She Hing Chiu Mr. Tse Chick Sang

Non-executive Directors: Mr. Cheung Sik Pang (Honorary Chairman) Mr. Ng Wing Po

Independent Non-executive Directors : Mr. Chang Kin Man Mr. Wu Tak Lung

Registered Office: Century Yard Cricket Square Hutchins Drive P.O. Box 2681 GT Grand Cayman British West Indies

Head Office and principal place of business: Units E&F, G/F Phase II, Kingsway Industrial Building 173–175 Wo Yi Hop Road Kwai Chung Hong Kong

19 November 2003

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE AND TO REPURCHASE SHARES

INTRODUCTION

At the Annual General Meeting, ordinary resolutions will be proposed to approve the granting of Repurchase Mandate, Share Issue Mandate and the extension of Share Issue Mandate. The purpose of this circular is to provide you with information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed ordinary resolutions at the Annual General Meeting.

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LETTER FROM THE CHAIRMAN

GENERAL MANDATE TO REPURCHASE SHARES

Pursuant to the ordinary resolution of the annual general meeting of the Company passed on 4 June 2002, a general and unconditional mandate was given to the Directors to exercise all the powers of the Company to repurchase Shares of the Company. Under the Listing Rules, such general mandate will lapse at the conclusion of the Annual General Meeting unless renewed at that meeting.

An ordinary resolution will be proposed at the Annual General Meeting granting the Directors authority to repurchase Shares up to 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of the relevant resolution approving the Repurchase Mandate.

An explanatory statement as required under the Listing Rules to provide the requisite information concerning the Repurchase Mandate is set out in the appendix hereto.

GENERAL MANDATE TO ISSUE SHARES

Pursuant to the ordinary resolution of the annual general meeting of the Company passed on 4 June 2002, a general and unconditional mandate was given to the Directors to exercise all the powers of the Company to allot, issue and deal with Shares of the Company. Under the Listing Rules, such general mandate will lapse at the conclusion of the Annual General Meeting unless renewed at that meeting.

At the Annual General Meeting, an ordinary resolution will be proposed as follows:

“THAT

• (a) the Directors are given a general and unconditional mandate during the Relevant Period to exercise all the powers of the Company to allot, issue and deal with any unissued Shares in the capital of the Company and to make an offer or agreement or grant an option which would or might require such Shares to be allotted and issued.

• (b) the Directors be authorized to make an offer or agreement or grant an option during the Relevant Period which would or might require Shares in the capital of the Company to be allotted and issued either during or after the end of the Relevant Period pursuant to (a) above.

• (c) the aggregate nominal value of the Shares in the capital of the Company allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the respective approval and authorization referred to in sub-paragraphs (a) and (b) above, otherwise than pursuant to a Rights Issue or pursuant to the exercise of options under the Share

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LETTER FROM THE CHAIRMAN

Option Scheme or an issue of Shares of the Company in lieu of the whole or part of a dividend on Shares of the Company in accordance with the existing articles of association or a specific authority granted by the Company’s shareholders in general meeting, shall not exceed (i) 20%, of the aggregate nominal value of the share capital of the Company in issue at the date of passing the relevant resolution approving the Share Issue Mandate and (ii) the aggregate nominal amount of the share capital of the Company that may have been repurchased pursuant to the resolution of Repurchase Mandate.”

EXTENSION OF THE SHARE ISSUE MANDATE

In addition, if the Repurchase Mandate and Share Issue Mandate are granted, an ordinary resolution will be proposed at the Annual General Meeting providing that any Shares repurchased under the Repurchase Mandate (up to a maximum of 10% of the issued shares as at the date of the granting of the Share Issue Mandate) will be added to the total number of Shares which may be allotted and issued under the Share Issue Mandate.

The Repurchase Mandate, Share Issue Mandate and the extension of the Share Issue Mandate will, if granted, remain in effect until the earliest of (i) the conclusion of the next annual general meeting of the Company; or (ii) the expiration of the period within which the next annual general meeting of the Company is required by any applicable law or Cayman Islands Law or the existing articles of association to be held; or (iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the Directors by the resolution concerned.

In respect of the Repurchase Mandate and the Share Issue Mandate, the Directors wish to state that they have no present intention to exercise neither the Repurchase Mandate to repurchase Shares nor the Share Issue Mandate to allot new Shares.

RECOMMENDATION

The Directors are of the opinion that the Repurchase Mandate and the Share Issue Mandate are in the best interests of the Company and recommend the Shareholders to vote in favour of the ordinary resolutions to be proposed at the Annual General Meeting.

Yours faithfully, For and on behalf of the Board of Directors of

Hon Po Group (Lobster King) Limited Cheung To Sang

Chairman and Managing Director

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EXPLANATORY STATEMENT

APPENDIX

This explanatory statement contains the information required under Rule 10.06(1)(b) of the Listing Rules. Its purpose is to provide shareholders with information reasonably necessary to enable them to make an informed decision on whether to vote for or against the resolution approving the Repurchase Mandate.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised of 630,000,000 Shares.

On the basis that no Shares are issued prior to the Annual General Meeting and subject to the passing of the relevant ordinary resolution approving the Repurchase Mandate, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 63,000,000 Shares.

2. REASONS FOR REPURCHASE

The Directors believe that the Repurchase Mandate is in the best interest of the Company and the Shareholders. Repurchases of Shares made under the Repurchase Mandate may, depending on the market conditions and funding arrangements at the time, lead to an enhancement of the value of the Company’s net assets and/or its earnings per share and will only be made when the Directors consider that such repurchases will benefit the Company and the Shareholders.

3. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its Memorandum and Articles of Association of the Company and the applicable laws of the Cayman Islands.

There might be a 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 2002) in the event that the Repurchase Mandate were to be exercised in full. 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.

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EXPLANATORY STATEMENT

APPENDIX

4. SHARE PRICES

The highest and lowest prices at which the Shares were traded on the Stock Exchange during each of the previous 12 months were as follows:

		Shares
	Highest		Lowest
	HK$		HK$
November 2002	0.143		0.125
December 2002	0.143		0.112
January 2003	0.138		0.100
February 2003	0.118		0.099
March 2003	0.113		0.090
April 2003	0.100		0.045
May 2003	0.068		0.034
June 2003	0.048		0.033
July 2003	0.055		0.040
August 2003	0.132		0.051
September 2003	0.160		0.100
October 2003	0.160		0.072

5. GENERAL

The Directors undertake to the Stock Exchange that they will exercise the powers of the Company to repurchase Shares in accordance with the Listing Rules and the applicable laws of the Cayman Islands.

If as a result of a repurchase of Shares, a shareholder’s proportionate interest in the voting rights of the Company increase, such increase will be treated as an acquisition for the purpose of the Takeovers Code. Accordingly, a shareholder, or 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.

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APPENDIX

EXPLANATORY STATEMENT

As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 336 of the Securities and Futures Ordinance, the substantial shareholders of the Company, being Hon Po Investment Limited (which is in turn a wholly-owned subsidiary of Hon Po Holdings Limited) held approximately 60.32% of the issued share capital of the Company. On the basis that no further Shares are issued or repurchased and in the event that the Repurchase Mandate is exercised in full, the shareholding of Hon Po Investment Limited will be increased to approximately 67.02% of the issued share capital of the Company respectively. As detailed in the Company’s announcement dated 29 September 2003, Hon Po Investment Limited has agreed to sell to Cipla Ltd., a company incorporated in the British Virgin Islands with limited liability and is beneficially owned as to 50% by Mr. Cheung Kam Foo and as to 50% by Mr. Lam Lui Ming, 348,516,000 shares or approximately 55.32% of the issued share capital of the Company. On the basis that no further shares are issued or repurchased and in the event that the Repurchase Mandate is exercised in full, the shareholding of Cipla Ltd. will be increased to approximately 61.47% of the issued share capital of the Company. On the basis of the said shareholdings, the Directors are not aware of any consequences which may arise under the Takeovers Code as a result of any repurchases made under the Repurchase Mandate.

None of the Directors, to the best of their knowledge, having made all reasonable enquiries, nor any of their respective associates (as defined in the Listing Rules) has any present intention to sell any Shares to the Company or its subsidiaries if the Repurchase Mandate is approved by the Shareholders.

No connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell any Shares to the Company, or have undertaken not to do so, in the event that the Repurchase Mandate is approved by the Shareholders.

6. SHARE PURCHASES MADE BY THE COMPANY

Neither the Company nor any of its subsidiaries purchased any of the Company’s Shares in the six months preceding the Latest Practicable Date.

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