China Energy Development Holdings Limited — Proxy Solicitation & Information Statement 2004

May 14, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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 securities dealer, 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 transferee or the bank, securities dealer 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)

(Stock Code: 228)

DISCLOSEABLE TRANSACTION AND TERMINATION OF CONNECTED TRANSACTION

13 May 2004

CONTENTS

		Page
1.	DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
2.	LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
3.	APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

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DEFINITIONS

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

“Assets”	as defined in the Sale and Purchase Agreement which means
	the decoration together with goods, chattels, inventories,
	fittings and furniture at and in the Premises;
“Assets Transfer”	the transfer of the Assets pursuant to the terms of the Sale
	and Purchase Agreement;
“Board”	board of Directors of the Company;
“Company”	Hon Po Group (Lobster King) Limited, a company
	incorporated in the Cayman Islands, the shares of which are
	listed on the Stock Exchange;
“Completion”	completion of the Assets Transfer under the terms of the
	Sale and Purchase Agreement;
“Composite Interest”	Composite Interest Limited, a company incorporated in Hong
	Kong, which is controlled by Mr. Wong;
“connected person”	has the meaning ascribed to it under the Listing Rules;
“Deed of Surrender”	a deed of surrender dated 20 April 2004 between Composite
	Interest and Oriental Team setting out, inter alia, the terms
	whereby Oriental Team agrees to surrender and Composite
	Interest agrees to accept surrender of the Premises;
“Directors”	the directors of the Company;
“Group”	the Company and its subsidiaries;
“HK$”	the lawful currency of Hong Kong;
“Hong Kong”	The Hong Kong Special Administrative Region of the PRC;
“Latest Practicable Date”	12 May 2004, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	for inclusion in this circular;
“Listing Rules”	The Rules Governing the Listing of Securities on the Stock
	Exchange;

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DEFINITIONS

• “Mr. Wong” Mr. Wong Chung Ming, a connected person of the Company by virtue of the relationship as set out in the section headed “Termination of Connected Transaction” in this circular;

• “Oriental Team” Oriental Team Investments Limited, a company incorporated in Hong Kong, and a non wholly-owned subsidiary of the Company held as to 67.03% by the Company;

• “Premises” all those Shops Nos. 5 & 6 on the Ground Floor, Shops Nos. 18 & 18A on the First Floor, the whole of the Second Floor, Flat No. 18 on the Third Floor and Flat No. 8 on the Fourth Floor of Alhambra Building, Nos. 383, 385, 385A, 385B, 387, 387A, 387B, 389, 389A-389C Nathan Road and Nos. 15-17 Kansu Street, Kowloon situate on the piece or parcels of ground registered in the Land Registry as Kowloon Inland Lot No. 2205;

• “Previous Tenancy Agreements” tenancy agreements dated 26 September 2000 and 15 April 2003, both made between Composite Interest as landlord and Oriental Team as tenant in relation to, inter alia, the lease of the Premises for a term of 5 years commencing from 8 July 2000 to 7 July 2005 and 6 years commencing from 1 January 2003 to 31 December 2008 respectively;

• “Sale and Purchase Agreement” the sale and purchase agreement dated 20 April 2004 entered into between Oriental Team and Trinity in relation to, inter alia, the Assets Transfer;

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

• “Shares” ordinary share(s) of HK$0.01 each in the capital of the Company;

• “Shareholders” holder(s) of the Shares; “Stock Exchange” The Stock Exchange of Hong Kong Limited;

• “Surrender” the surrender of the Premises by Oriental Team to Composite Interest pursuant to the terms of the Deed of Surrender; and

• “Trinity” Trinity International Development Limited, a company incorporated in Hong Kong.

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LETTER FROM THE BOARD

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Hon Po Group (Lobster King) Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 228)

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

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

Head Office and

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

Principal Place of Business: Units E and F, G/F, Phase II Kingsway Industrial Building 173-175 Wo Yi Hop Road Kwai Chung New Territories Hong Kong

13 May 2004

To the Shareholders

Dear Sir/Madam,

DISCLOSEABLE TRANSACTION AND TERMINATION OF CONNECTED TRANSACTION

INTRODUCTION

On 22 April 2004, the Directors announced that pursuant to the Sale and Purchase Agreement dated 20 April 2004, Oriental Team, a non wholly-owned subsidiary of the Company, agreed to sell and Trinity agreed to purchase the Assets pursuant to the terms set out in the Sale and Purchase Agreement. The Assets Transfer constituted a discloseable transaction for the Company under Rule 14.06(2) of the Listing Rules.

As part of the terms of the Assets Transfer, on 20 April 2004, Oriental Team also entered into a Deed of Surrender with Composite Interest pursuant to which Oriental Team agreed to surrender to Composite Interest the Premises pursuant to the terms set out in the Deed of Surrender.

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LETTER FROM THE BOARD

THE SALE AND PURCHASE AGREEMENT

On 20 April 2004, the Sale and Purchase Agreement was signed by Oriental Team as vendor and Trinity as purchaser.

Prior to Completion, Oriental Team carried on the business of a Chinese seafood restaurant under the name of Chung Wah Restaurant at the Premises. Pursuant to the Sale and Purchase Agreement, inter alia, Oriental Team agreed to sell and Trinity agreed to purchase the Assets.

Completion

Completion was subject to:

1. Composite Interest agreeing to accept surrender of the Premises; and

2. Trinity entering into a tenancy agreement in respect of the Premises with Composite Interest effective on 19 April 2004.

The conditions were satisfied on 20 April 2004 and the Assets were delivered to Trinity at the Premises on Completion. Completion took place on 20 April 2004.

Consideration

HK$6,000,000 was paid on Completion. The Consideration represents a mutually agreed price, arrived at after arm’s length negotiations. The Directors are of the view the Consideration is fair and reasonable on the basis that it is substantially above the book value of the Assets and that Chung Wah Restaurant has been a loss making business for Oriental Team in the past two financial years.

Other Terms

Oriental Team agreed to use its best endeavours to procure the transfer to Trinity (or as it may direct) the restaurant and liquor licences issued for the business of the restaurant conducted at the Premises after Completion.

General Information

The value of the Assets is approximately HK$2,055,000 based on attributable book value of the Assets in the latest audited financial statements of Oriental Team for the financial year ended 31 December 2003.

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LETTER FROM THE BOARD

The impact of the Assets Transfer on the assets and liabilities of the Group is that the assets of the Group will be decreased by the book value of the Assets and liabilities of the Group will be reduced by approximately HK$4,000,000, being liabilities related to the Assets Transfer. A gain of approximately HK$1,900,000 on the Assets Transfer is expected to accrue to the Company, being the difference between the Consideration received by Oriental Team and the book value of the Assets and after taking into account severance and related payments to staff and costs of the transfer of approximately HK$2,000,000.

The sale proceeds of HK$6,000,000 for the Assets Transfer will be used as to approximately HK$4,700,000 for settlement of the amount paid by Oriental Team to Composite Interest under the Deed of Surrender and as to approximately HK$1,300,000 for general working capital of Oriental Team.

The Company is the holding company of a group of companies engaged in the operation of restaurants in Hong Kong.

Oriental Team is engaged in the operation of Chung Wah Restaurant at the Premises.

To the best of the Director’s knowledge, information and belief, having made all reasonable enquires, Trinity and its ultimate beneficial owner are third parties independent of the Company and connected persons of the Company. So far as the Directors are aware, Trinity is engaged in running Chinese restaurants.

THE SURRENDER

On 20 April 2004, the Deed of Surrender was signed by Composite Interest as landlord and Oriental Team as tenant.

Terms

Pursuant to the Deed of Surrender, inter alia, Oriental Team agreed to surrender and Composite Interest agreed to accept the Surrender of the Premises. Under the Deed of Surrender, Oriental Team also agreed to pay in full of all outstanding rent due from Oriental Team up to 18 April 2004, calculated based on the terms of the Previous Tenancy Agreements amounting in total to HK$5,902,500 plus default interest (at a maximum rate of prime rate plus 2%) on the outstanding rent amounting in total to HK$197,225 calculated based on the rate as set out in the respective Previous Tenancy Agreements and to pay all management and miscellaneous charges, government rent and utility charges in respect of the Premises up to 18 April 2004.

Composite Interest agreed to release Oriental Team from all obligations under the relevant tenancy agreement upon settlement of all sums as set out above, the delivery of the Premises and the execution of a new tenancy agreement between Trinity and Composite Interest in relation to the Premises.

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LETTER FROM THE BOARD

The Surrender took effect from 18 April 2004. No consideration was paid by Oriental Team to Composite Interest for the Surrender.

Termination of Connected Transaction

Composite Interest is a company controlled by Mr. Wong. Mr. Wong is a director of A. Top Investment Limited and Oriental Team, both of which are indirect non wholly-owned subsidiaries of the Company. He is also interested in approximately 4.17% of the ordinary shares of A. Top Investment Limited. Mr. Wong and his family are beneficially interested in Megalopolis Limited which in turn holds approximately 32.97% of the ordinary shares in Oriental Team. Pursuant to the Listing Rules, Mr. Wong and Composite Interest are connected persons of the Company. The tenancy agreement entered into between Oriental Team and Composite Interest in relation to the Premises dated 15 April 2003, prior to its surrender, fell within Rule 14.25(1) of the previous Listing Rules (prior to amendments thereto which came into effect on 31 March 2004), and was surrendered to Composite Interest pursuant to the Deed of Surrender dated 20 April 2004.

REASON FOR THE TRANSACTION AND BENEFITS TO THE COMPANY

The operation of Chung Wah Restaurant is loss making for Oriental Team. The Assets Transfer allows Oriental Team to dispose of the Assets at a price substantially above book value and the proceeds of sale received by Oriental Team covers all outstanding rent payable to Composite Interest under the Previous Tenancy Agreements with surplus to be used for general working capital of Oriental Team.

The Directors, including the independent non-executive directors of the Company, are of the view that the terms of the Surrender and Assets Transfer are fair and reasonable and in the best interests of the Shareholders as a whole.

GENERAL

The Assets Transfer constitutes a discloseable transaction for the Company under Chapter 14.06(2) of the Listing Rules.

ADDITIONAL INFORMATION

Your attention is drawn to the General Information as incorporated in the appendix of this circular.

By Order of the Board Hon Po Group (Lobster King) Limited Cheung To Sang

Chairman and Managing Director

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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 Group. 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, there are no other facts not contained herein the omission of which would make any statement contained in this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Interests of Directors

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the Shares, underlying Shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which 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 are taken or deemed to have under such provisions of the SFO), the Model Code for Securities Transactions by Directors of Listed Companies and which were required to be entered into the register required to be kept under section 352 of the SFO were as follows:

Long positions in shares of associated corporations (Note 1)

				**Total **	Approximate
	Number	of shares/capacity		number of	%
Name	Beneficial	Family	Corporate	**shares **	shareholding
Mr. Cheung To Sang	–	(Note 2)	73,996,437	73,996,437	17.51%
			(Note 3)
Mr. Chan Nun Chiu	–	–	53,963,137	53,963,137	12.77%
			(Note 4)
Mrs. Cheung Lim	–	(Note 2)	43,762,162	43,762,162	10.35%
Mai Tak, Grace			(Note 5)
Mr. She Hing Chiu	5,152,338	–	7,821,000	12,973,338	3.07%
			(Note 6)
Mr. Ng Wing Po	–	–	45,913,287	45,913,287	10.86%
			(Note 7)

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GENERAL INFORMATION

APPENDIX

						**Total **	Approximate
	Number of shares/capacity					number of	%
Name	Beneficial		Family	Corporate		**shares **	shareholding
Mr. Cheung Sik Pang	–	56,037,637			–	56,037,637	13.26%
			(Note 8)
Mr. Tse Chick Sang	2,553,425		–	1,415,250		3,968,675	0.94%
				(Note	9)

• Note 1: All these shares are shares in Hon Po Holdings Limited, the ultimate holding company of the Group and an associated corporation of the Company.

• Note 2: The interests in shares of his/her spouse are excluded pursuant to s.344(1)(a) of the SFO.

• Note 3: These shares are held by To Sang Management Company Limited, a company controlled by a discretionary trust of which Mr. Cheung To Sang and certain of his children are beneficiaries.

• Note 4: These shares are held by Nun Chiu Investments Limited, a company in which Mr. Chan Nun Chiu and his wife have a controlling interest.

• Note 5: 4,700,750 shares are held by Tabo Development Limited, a company in which Mrs. Cheung Lim Mai Tak, Grace owns approximately 74% of the issued share capital. 39,061,412 shares are held by Lim Mai Tak Consultants and Investments Limited, a company which is controlled indirectly by a discretionary trust of which Mrs. Cheung Lim Mai Tak, Grace and certain of her children are beneficiaries.

• Note 6: These shares are held by Tread Wood Investment Limited, a company in which Mr. She Hing Chiu owns approximately 50% of the issued share capital.

• Note 7: These shares are held by N.W.P. Investments Limited, a company which is controlled indirectly by a discretionary trust of which Mr. Ng Wing Po’s wife and certain of his children are beneficiaries.

• Note 8: These shares are held by Kung Ping Investments Limited, a company which is deemed to be controlled by Mr. Cheung Sik Pang and his wife.

• Note 9: These shares are held by King Space Limited, a company which is controlled by Mr. Tse Chick Sang.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests and short positions in the Shares, underlying Shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which 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 are taken or deemed to have under such provisions of the SFO), the Model Code for Securities Transactions by Directors of Listed Companies and which were required to be entered into the register required to be kept under section 352 of the SFO.

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GENERAL INFORMATION

APPENDIX

(b) Interests of Shareholders

As at the Latest Practicable Date, so far as is known to the Directors and the chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had an interest or short position in the Shares and underlying Shares which fall to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO.

		Number of	%
Name	Capacity	Shares	shareholding
Hon Po Holdings Limited	Corporate	380,000,000	60.32%
		(Note 10)
Hon Po Investment Limited	Corporate	380,000,000	60.32%
		(Note 10)

Note 10: The interest of Hon Po Investment Limited in the Shares is attributable to Hon Po Holdings Limited on the basis that Hon Po Investment Limited is wholly-owned by Hon Po Holdings Limited.

(c) Substantial shareholding in other members of the Group

As at the Latest Practicable Date, so far as is known to the Directors and the chief executive of the Company, the following persons (other than a Director or chief executive of the Company) are directly or indirectly interested in 10 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other member of the Group:

	Name of	%
Name of Subsidiary	Shareholder	Shareholding
Oriental Team Investments Limited	Megalopolis Limited	32.97%

Note: Megalopolis Limited is a company in which Mr. Wong Chung Ming and his children are beneficially interested. Mr. Wong Chung Ming is a director of A. Top Investment Limited and Oriental Team Investments Limited which are indirect non wholly-owned subsidiaries of the Company.

Save as disclosed above, the Directors and the chief executive of the Company are not aware that there is any person (other than a Director or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares 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 10 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other member of the Group.

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GENERAL INFORMATION

APPENDIX

3. SERVICE CONTRACTS

Except for Mr. Tse Chick Sang, an executive director of the Company, who has a service contract with the Company with an initial term of three years commencing on 1 August 2002, each of the remaining executive and non-executive directors has a service contract with the Company for an initial term of three years commencing on 1 February 2002, which will continue thereafter until terminated by either party giving not less than three months’ notice in writing.

Save as disclosed above, none of the Directors has entered into any service agreement with any member of the Group nor are there any other service agreements proposed which will not expire or be determinable by the Group within one year without payment of compensation (other than statutory compensation).

4. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration proceedings of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened against any member of the Group.

5. COMPETING INTERESTS

The following directors are considered to have interests in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group:

• (i) Mrs. Cheung Lim Mai Tak, Grace, an executive director, is interested in approximately 74% of the issued share capital of Tabo Development Limited, a shareholder of Hon Po Holdings Limited, which in turn is interested in approximately 39.13% of the issued share capital of Golden Jumbo Thai Restaurant Limited (“Golden Jumbo”). Golden Jumbo operates a Thai restaurant in Hong Kong. As (a) Golden Jumbo is principally engaged in the provision of Thai food while the Group is principally engaged in the provision of Chinese food; (b) the Group and Golden Jumbo target different customer groups; and (c) apart from Mrs. Cheung Lim Mai Tak, Grace, Golden Jumbo is operated by management different from that of the Group, the Group is capable of carrying out its business independently of, and at arm’s length from, the business of Golden Jumbo.

• (ii) Mr. Cheung Sik Pang, a non-executive director, through his own and his family interests in Kung Ping Investments Limited, a substantial shareholder of Hon Po Holdings Limited, and Mr. Ng Wing Po, a non-executive director, through his and his family interests in N.W.P. Investments Limited, a substantial shareholder of Hon Po Holdings Limited, are deemed to be indirectly interested in approximately 36.36% and 18.18% of the issued share capital of Very Good

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GENERAL INFORMATION

APPENDIX

Restaurant Limited (“Very Good”), respectively. Very Good operates a Chinese restaurant in Hong Kong. As both Mr. Cheung Sik Pang and Mr. Ng Wing Po are non-executive directors and are not involved in the daily management of the Group; and Very Good is a single restaurant operator, the Group is capable of carrying on its business independently of, and at arm’s length from, the business of Very Good.

6. GENERAL

• (i) The Secretary and qualified accountant of the Company is Mr. Luk Chi Shing, an associate member of the Hong Kong Society of Accountants and member of the Association of Chartered Certified Accountants.

• (ii) The share registrar and transfer office of the Company in Hong Kong is located at Tengis Limited, of G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

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