China Energy Development Holdings Limited — Proxy Solicitation & Information Statement 2010

Aug 13, 2010

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 a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or otherwise transferred all your shares in China Energy Development Holdings Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or another agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim 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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(Incorporated in the Cayman Islands with limited liability) (Stock Code: 228)

MAJOR TRANSACTION AND NOTICE OF EXTRAORDINARY GENERAL MEETING

A letter from the board of directors of China Energy Development Holdings Limited is set out on pages 3 to 8 of this circular.

A notice convening the extraordinary general meeting (the “EGM”) is set out on pages 14 to 15 of this circular. The EGM is to be held at Plaza 1-2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 30 August 2010 at 11:00 a.m. to approve matters referred to in this circular. Whether or not you are able to attend the EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Hong Kong branch share registrar of the Company, Tricor Tengis Limited, 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event, not less than 48 hours before the respective time appointed for holding the meeting or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof should you so wish.

13 August 2010

* For identification purposes only

CONTENTS

		Page
DEFINITION ................................................................................................................................		1
LETTER FROM THE	BOARD..................................................................................................	3
APPENDIX I —	FINANCIAL INFORMATION
	OF THE GROUP.............................................................................	9
APPENDIX II —	GENERAL INFORMATION.............................................................	10
NOTICE OF EGM........................................................................................................................		14

– i –

DEFINITIONS

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

• “Announcement” the announcement of the Company dated 23 July 2010 as supplemented by the announcement of the Company dated 26 July 2010

• “Board” the board of Directors

• “Company” China Energy Development Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange (stock code:00228)

• “Completion” the completion of the sale and purchase of the Sale Shares and Sale Loan under the Disposal Agreement

• “Completion Date” the third business day after fulfillment or waiver (if applicable) of all the conditions precedent immediately prior to Completion) or such other date as the Vendors and the Purchaser may agree in writing

• “Consideration” the consideration payable by the Purchaser to the Vendors for the Disposal

• “Directors” the directors of the Company

• “Disposal” the disposal of the Sale Shares and the Sale Loan by the Vendors to the Purchaser pursuant to the Disposal Agreement

• “Disposed Company” Metropolis Harbour View Chinese Cuisine Limited, a company incorporated in Hong Kong and wholly and beneficially owned by the Vendors

• “Disposal Agreement” the conditional sale and purchase agreement dated 23 July 2010 and entered into between the Purchaser and the Vendors in relation to the disposal of the Sale Shares and the Sale Loan

• “EGM” the extraordinary general meeting to be held by the Company to consider and, if thought fit, approve the Disposal Agreement

• “Group” the Company and its subsidiaries

• “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

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

– 1 –

DEFINITIONS

“Independent Third	any person who himself is, and (in the case of corporate entity) its
Party(ies)”	ultimate beneficial owners are, to the best of the Directors’ knowledge,
	information and belief, having made all reasonable enquiries, third
	parties independent of the Company and the connected person (as
	defined in the Listing Rules) of the Company
“Latest Practicable Date”	12 August 2010, 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
“Long Stop Date”	on or before 30 September 2010 or such other date as may be agreed
	in writing between the Purchaser and the Vendors
“Purchaser”	Speedy Fortune Limited, an Independent Third Party
“Sale Loan”	all the interests, benefits and rights of and in the shareholders’ loan
	owed by the Disposed Company to the Vendor I as at the Completion
	Date, the amount of which as at the date of the Disposal Agreement is
	HK$4,400,105
“Sale Shares”	an aggregate of 10,000 ordinary shares of HK$1.00 each in the
	Disposed Company, representing the entire issued ordinary shares of
	the Disposed Company, to be sold by the Vendors to the Purchaser
	pursuant to the Disposal Agreement
“Shares”	ordinary shares of HK$0.05 each in the capital of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendors”	collectively Vendor I and Vendor II
“Vendor I”	Hon Po International Limited, a company incorporated in the British
	Virgin Islands and a wholly-owned subsidiary of the Company holding
	9,999 ordinary shares of the Disposed Company
“Vendor II”	Hon Po Management Limited, a company incorporated in the British
	Virgin Islands and a wholly-owned subsidiary of the Company holding
	1 ordinary share of the Disposed Company
“%”	per cent.

– 2 –

LETTER FROM THE BOARD

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(Incorporated in the Cayman Islands with limited liability) (Stock Code: 228)

Executive Directors

Mr. Zhao Guoqiang (Chief Executive Officer)

Mr. Chan Shi Yung Mr. Chui Kwong Kau Mr. Liu Baohe Mr. Zhang Zhenming Mr. Huang Changbi

Registered office

Cricket Square Hutchins Drive P. O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place

Independent non-executive Directors

Mr. Fu Wing Kwok, Ewing Mr. Yin Guohui Ms. Zhang Wei

of business in Hong Kong Unit 3607, 36th Floor West Tower, Shun Tak Centre 168-200 Connaught Road Central Hong Kong

13 August 2010

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the Announcement whereby the Board announces that on 23 July 2010 (after trading hours), the Vendors, entered into the Disposal Agreement with the Purchaser, an Independent Third Party, whereby the Vendors have agreed to sell, and the Purchaser has agreed to purchase, the Sale Shares and the Sale Loan for an aggregate consideration of HK$4,410,105, which shall be settled in cheque or cash upon Completion. The Sale Shares represent the entire issued ordinary shares of the Disposed Company and the Sale Loan represents all amounts due to the Vendor I by the Disposed Company as at the date of the Disposal Agreement.

The Disposal constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the approval of the Shareholders at the EGM. As no Shareholder has any interest in the Disposal which is different from other Shareholders, no Shareholder is required to abstain from voting in respect of the proposed ordinary resolution to approve the Disposal Agreement at the EGM.

The purpose of this circular is to provide you with details of the Disposal Agreement and a notice of EGM.

* For identification purposes only

– 3 –

LETTER FROM THE BOARD

THE DISPOSAL AGREEMENT

Date

23 July 2010

Parties

• Vendor I: Hon Po International Limited

• Vender II: Hon Po Management Limited

• Purchaser: Speedy Fortune Limited

The Purchaser is principally engaged in investment holding. To the best of the information, knowledge and belief of the Directors having made all reasonable enquiry, some of the ultimate beneficial shareholders of the Purchaser are also the directors of the Disposed Company. However, as each of them together with their respective concert parties individually holds not more than 30% of the issued share capital of the Purchaser and has no shareholding interest or directorship in the Company (save for being directors of the Disposed Company), the Purchaser is an Independent Third Party.

Assets to be disposed

The assets to be disposed comprise of the Sale Shares, representing the entire issued ordinary shares of the Disposed Company, and the Sale Loan, representing all amounts due to the Vendor I by the Disposed Company as at the Completion Date. The major assets held by the Disposed Company are rental and other deposits derived in the ordinary course of its business in an aggregate amount of approximately HK$4,200,000.

Consideration

The aggregate Consideration of HK$4,410,105 shall be paid by the Purchaser to the Vendors in cheque or cash upon Completion, comprising of HK$10,000 payable on the Sale Shares and HK$4,400,105 payable on the Sale Loan.

The Consideration was arrived at after arm’s length negotiations between the parties with reference to (a) the audited net liabilities of the Disposed Company as at 31 December 2009 of approximately HK$8,223,000; and (b) the face value of the Sale Loan of HK$4,400,105 as at 30 June 2010.

In the event that the aggregate amount of the Sale Loan as at the Completion Date is more than or less than HK$4,400,105, the Consideration shall be adjusted by increasing or reducing (as the case may be) the amount of the Consideration payable by the Purchaser to the Vendor I upon Completion on a dollar-for-dollar basis subject to a cap amount of HK$5,000,000 for the Sale Loan.

– 4 –

LETTER FROM THE BOARD

In light of the above, the Directors (including the independent non-executive Directors) consider that the Consideration is fair and reasonable.

Conditions Precedent

Completion is conditional upon the following conditions being fulfilled and remaining fulfilled or waived by the Purchaser as at Completion:—

• (a) the warranties in the Disposal Agreement remaining true and accurate in all material respects and not misleading in any material respect at Completion as if repeated at Completion and at all times between the date of the Disposal Agreement and Completion; and

• (b) all necessary statutory governmental and regulatory obligations having been complied with and all necessary regulatory authority in Hong Kong, governmental and third party consents and approvals (including those person entitled to any pre-emption rights) and waivers for the purposes of the transactions contemplated under the Disposal Agreement having been obtained without any conditions (or subject to other conditions reasonably acceptable to the Parties).

If any of the above conditions precedent has not been fulfilled (or waived by the Purchaser) on or before the Long Stop Date, either the Vendors or the Purchaser shall be entitled to rescind the Disposal Agreement by giving written notice to the other and the provisions of the Disposal Agreement shall from such date have no further force and effect and no party to the Disposal Agreement shall have any liability (without prejudice to the rights of the parties in respect of any antecedent breaches).

As at the Latest Practicable Date, none of the above conditions precedent has been fulfilled (or waived by the Purchaser).

Completion

Completion shall take place on or before the Completion Date or such other date as may be agreed by Vendors and the Purchaser in writing subject to the satisfaction or waiver of the above conditions precedent.

INFORMATION ON THE COMPANY AND THE GROUP

The Company is principally engaged in investment holding. The current principal activities of the Group include operating Chinese restaurants in Hong Kong. The Company maintains its long-term confidence on natural gas and natural resources industries and is looking for investment opportunities in these industries.

INFORMATION ON THE DISPOSED COMPANY

The Disposed Company is a company incorporated in Hong Kong and is wholly and beneficially owned by the Vendors. The Disposed Company is principally engaged in operating a Chinese restaurant in Hong Kong.

– 5 –

LETTER FROM THE BOARD

FINANCIAL INFORMATION ON THE DISPOSED COMPANY

The following are the audited financial information on the Disposed Company for the two years ended 31 December 2008 and 2009 which were prepared in accordance with the accounting policies of Hong Kong Financial Reporting Standards and are extracted from the audited financial statements of the Disposed Company:

of the Disposed Company:
	For the	For the
	year ended	year ended
	31 December 2009	31 December 2008
	(HK$’000)	(HK$’000)
Turnover	41,210	51,434
Loss before taxation	(2,236)	(6)
Loss after taxation	(2,236)	(6)
Net liabilities	8,223	5,987
Total assets	10,514	10,038

As at 31 December 2009, the audited net liabilities of the Disposed Company were approximately HK$8,223,000.

REASONS FOR AND BENEFITS OF THE DISPOSAL

The Chinese restaurant business continues to face the high price of raw material, demand from the customers to reduce price and the intensive competitive market in Hong Kong. Having considered the loss making position of this Chinese restaurant for the financial year of 2008 and 2009, the Board considers that (i) the Disposal would provide a good opportunity for the Group to discontinue the business of this Chinese restaurant and will enable the Group to avoid any further losses that will possibly be incurred by the Disposed Company in view of the uncertain operating environment in Hong Kong; (ii) it enables the Group to focus its resources in the remaining profit making Chinese restaurant; (iii) the Disposal would also provide additional cash and allow the Group to redeploy its resources to other investment opportunities and (iv) no further capital injection will be required for Disposed Company. The Board is therefore of the opinion that the Disposal represents a good opportunity for the Company to dispose the Disposed Company. Following the Disposal, the Group will continue to operate one Chinese restaurant. The Group has no intention to cease the operation of this restaurant after the Disposal. Accordingly, the Company will continue to have a sufficient level of operations following the Disposal to maintain its listing status having considered that the turnover and current assets of this remaining one Chinese restaurant amounted to approximately HK$42.7 million and HK$3.6 million, respectively as at 31 December 2009, being the date of the latest audited account of the Company.

The Directors (including the independent non-executive Directors) are of the view that the terms of the Disposal Agreement are on normal commercial terms, which are fair and reasonable and, taking into account the factors above, the entering into of the Disposal Agreement is in the interests of the Company and the Shareholders as a whole.

– 6 –

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE DISPOSAL

The Directors estimates that upon Completion, the Group is expected to record a gain from the Disposal of approximately HK$8,233,000, representing the difference between the proceeds of the par value ordinary shares from the Disposal of approximately HK$10,000 and the audited net liabilities of the Disposed Company attributable to the Group of approximately HK$8,223,000 as at 31 December 2009. The total assets and total liabilities of the Group would decrease by approximately HK$10,514,000 and HK$18,737,000 respectively. In addition, turnover and earnings of the Group will decrease as a result of the Disposal. The earnings of the Group is not expected to be materially affected by the Disposal.

Upon Completion, the Disposed Company will cease to be a subsidiary of the Company and its financial results will not be consolidated into the Group’s financial statements.

USE OF PROCEEDS

The Directors expect that the net proceeds from the Disposal of approximately HK$4,400,000 (after deducting all relevant fees and expenses) will be used for general working capital of the Group.

FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Chinese restaurant business continues to face the intensive competitive market and uncertain operating environment in Hong Kong. The Group will continue to manage this business segment with a cautious approach and will not pour any significant financial resources into this segment. The remaining Chinese restaurant is in itself sufficient in terms of financial resources for its operations, so no new funding will be required for the remaining restaurant business.

The Directors consider that upon Completion, the Group’s financial and cash position can be further strengthened.

Apart from the Chinese restaurant business, the Directors are constantly reviewing potential investment opportunities that would offer high and stable returns, including but not limited to investments in natural gas and natural resources industries.

As at the Latest Practicable Date, the Company has entered into a conditional sale and purchase agreement dated 22 January 2009 in relation to acquisition of the right in drilling, exploration, exploitation and production of oil and/or natural gas in the PRC (the “Acquisition”), as varied by the supplemental agreements dated 30 July 2009, 31 December 2009, 30 April 2010 and 13 July 2010. Details of the Acquisition have been disclosed in the announcements of the Company dated 4 February 2009, 25 February 2009, 29 June 2009, 12 October 2009, 31 December 2009, 30 April 2010 and 13 July 2010. The Acquisition has not yet completed up to the Latest Practicable Date.

The Board believes that the Acquisition is an attractive investment opportunity for the Group which will create value for the Shareholders.

LISTING RULES IMPLICATIONS

The Disposal constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the approval of the Shareholders at the EGM. As no Shareholder has any interest in the Disposal which is different from other Shareholders, no Shareholder is required to abstain from voting in respect of the proposed ordinary resolution to approve the Disposal Agreement at the EGM.

– 7 –

LETTER FROM THE BOARD

EGM

Set out on pages 14 to 15 of this circular is a notice convening the EGM to consider and, if thought fit, to approve the Disposal Agreement and the transactions contemplated thereunder. A form of proxy for use at the EGM is enclosed herewith.

Whether or not you intend to attend and vote at such meeting, you are requested to complete and return the enclosed form of proxy to the Hong Kong branch share registrar of the Company, Tricor Tengis Limited, 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong 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 holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

RECOMMENDATION

The Directors believe that the Disposal contemplated under the Disposal Agreement is in the interests of the Group and the Shareholders as a whole and, accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular.

By Order of the Board China Energy Development Holdings Limited Chui Kwong Kau Executive Director

– 8 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. INDEBTEDNESS STATEMENT

As at the close of business on 30 June 2010, being the latest practicable date for the purpose of ascertaining certain information relating to this indebtedness statement, the Group had no outstanding bank borrowings.

The Group did not have, at the Latest Practicable Date, any mortgages, charges, debentures, loan capital issued and outstanding or agreed to be issued, debt securities, bank overdrafts, loans or other similar indebtedness, finance leases or hire purchase commitments, liabilities under acceptance or acceptance credits or guarantees or other material contingent liabilities.

The Directors confirm that there has been no material change in the indebtedness and contingent liabilities of the Group since the close of business on 30 June 2010.

2. WORKING CAPITAL

As disclosed in the Company’s annual report dated 26 April 2010, the net assets of the Group as at 31 December 2009 was approximately HK$639,493,000.

After due and careful enquiry and taking into account the internal resources of the Group and the estimated net proceeds of approximately HK$4,400,000 (after deducting all relevant fees and expenses) from the Disposal, the Directors are of the opinion that the Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of this circular.

3. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2009, being the date to which the latest published audited financial statements of the Group were made up.

– 9 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the directors of the Company collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DIRECTORS’ INTERESTS IN SECURITIES

As at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporation(s) (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); (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.

3. SUBSTANTIAL SHAREHOLDERS’ INTERESTS

So far as is known to the Directors or chief executive of the Company, there are no persons (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, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would fall to be disclosed under provisions of Division 2 and 3 of Part XV of the SFO, or who, as at the Latest Practicable Date, was directly and indirectly interested in ten per cent. 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 member the Group.

4. SERVICE CONTRACT

As the Latest Practicable Date, none of the Directors had any existing or proposed 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).

– 10 –

GENERAL INFORMATION

APPENDIX II

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors and their respective associates was considered to have interests in businesses apart from the Group’s businesses which compete, or are likely to compete, either directly or indirectly, with the businesses of the Group pursuant to Rule 8.10 of the Listing Rules.

6. LITIGATION

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

7. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS

No contract or arrangement in which any of the Directors is materially interested and which is significant in relation to the business of the Group subsisted as at the Latest Practicable Date. As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been, since 31 December 2009 (the date to which the latest published audited consolidated accounts of the Group were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

8. MATERIAL CONTRACTS

Within the two years immediately preceding the date of this circular, the following are contracts (not being contracts entered into in the ordinary course of business) entered into by the members of the Group which are or may be material:

• (a) the sale and purchase agreement dated 28 October 2008 and entered into between Newstar Assets Management Limited, Silverwise Limited (“Silverwise”) and the Company in relation to the disposal of the entire issued share capital of each of Achieve Smart Finance Limited (“Achieve Smart”) and Bright Horizon Worldwide Inc. (“Bright Horizon”) and all amounts owing by Achieve Smart, Bright Horizon and Macau Natural Gas Company Limited to Silverwise as at the date of completion for an aggregate consideration of HK$76,093,061.88;

• (b) the conditional sale and purchase agreement dated 22 January 2009 and entered into among the Company, Totalbuild Investments Holdings Group Limited (the “Vendor”), China Era Energy Power Investment (Hong Kong) Limited (“China Era Energy”) and Mr. Wang Guoju (“Mr. Wang”) in respect of the acquisition of: (i) the entire issued share capital of Totalbuild Investments Group (Hong Kong) Limited for an aggregate consideration of not less than HK$2 billion and not more than HK$10 billion (subject to valuation); and (ii) the shareholders’ loan on a dollar-for-dollar basis;

– 11 –

GENERAL INFORMATION

APPENDIX II

• (c) the share charge dated 22 January 2009 and entered into between Mr. Wang and the Company in relation to charge over the entire issued share capital of Totalbuild Investments Holdings Group Limited in favour of the Company;

• (d) the conditional sale and purchase agreement dated 22 May 2009 and entered into between Speedy Fortune Limited and Hon Po International Limited in relation to the disposal of the entire issued share capital of Dragongem Development Limited at an aggregate consideration of HK$100;

• (e) the conditional sale and purchase agreement dated 22 May 2009 and entered into between Speedy Fortune Limited and Hon Po International Limited (“Hon Po”) in relation to the disposal of the entire issued share capital of Jing Hua (Allied) Limited (“Jing Hua”) at an aggregate consideration of HK$10,000 and the shareholders’ loan owed by Jing Hua to Hon Po at an aggregate consideration of HK$3,845,615.30;

• (f) the conditional sale and purchase agreement dated 22 May 2009 and entered into between Speedy Fortune Limited and Hon Po International Limited in relation to the disposal of the entire issued share capital of More Development Limited (“More Development”) at an aggregate consideration of HK$100 and the shareholders’ loan owed by More Development to Hon Po at an aggregate consideration of HK$5,169,985.86;

• (g) the supplemental agreement dated 30 July 2009 and entered into among the Company, the Vendor, China Era Energy and Mr. Wang as disclosed in the announcement of the Company dated 30 July 2009;

• (h) the conditional placing agreement dated 21 September 2009 and entered into between the Company and Kingston Securities Limited in relation to the placing of 604,780,000 new Shares at HK$0.39 per Share;

• (i) the supplemental agreement dated 31 December 2009 and entered into among the Company, the Vendor, China Era Energy and Mr. Wang as disclosed in the announcement of the Company dated 31 December 2009;

• (j) the conditional placing agreement dated 28 January 2010 and entered into between the Company and Kingston Securities Limited in relation to the placing of 725,000,000 new Shares at HK$0.45 per Share;

• (k) the supplemental agreement dated 30 April 2010 and entered into among the Company, the Vendor, China Era Energy and Mr. Wang as disclosed in the announcement of the Company dated 30 April 2010;

• (l) the supplemental agreement dated 13 July 2010 and entered into among the Company, the Vendor, China Era Energy and Mr. Wang as disclosed in the announcement of the Company dated 13 July 2010; and

• (m) the Disposal Agreement.

– 12 –

GENERAL INFORMATION

APPENDIX II

9. MISCELLANEOUS

• (a) The registered office of the Company is at Cricket Square, Hutchins Drive, P. O. Box 2681, Grand Cayman KY1-1111, Cayman Islands and the head office and principal place of business of the Company in Hong Kong is at Unit 3607, 36th Floor, West Tower, Shun Tak Centre, No. 168-200 Connaught Road Central, Hong Kong.

• (b) The secretary of the Company is Mr. Wong Siu Keung, Joe, who is an associate member of The Hong Kong Institute of Certified Public Accountants and a fellow member of the Association of Chartered Certified Accountants.

• (c) The principal share registrar and transfer office of the Company is Butterfield Fund Services (Cayman) Limited at Butterfield House, 68 Fort Street, P. O. Box 705, Grand Cayman KY1-1107, Cayman Islands.

• (d) The Hong Kong branch share registrar of the Company is Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.

• (e) The English text of this circular shall prevail over the Chinese text in the event of any inconsistency between the English and the Chinese text.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the head office and principal place of business of the Company in Hong Kong at Unit 3607, 36th Floor, West Tower, Shun Tak Centre, No.168-200 Connaught Road Central, Hong Kong up to and including the date of the EGM:

• (a) the memorandum of association and articles of association of the Company;

• (b) the annual report of the Company for the three financial years ended 31 December 2009;

• (c) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix;

• (d) a copy of each of the circulars issued by the Company pursuant to the requirements set out in Chapter 14 and/or 14A of the Listing Rules since 31 December 2009 (being the date to which the latest published audited consolidated financial statements of the Company was made);

• (e) the Disposal Agreement; and

• (f) this circular.

– 13 –

NOTICE OF EGM

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 228)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of China Energy Development Holdings Limited (the “Company”) will be held at Plaza 1-2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 30 August 2010 at 11:00 a.m. for the purposes of considering and, if thought fit, passing the following resolution with or without amendments as ordinary resolution:

ORDINARY RESOLUTION

“ THAT the conditional sale and purchase agreement dated 23 July 2010 and entered into between Speedy Fortune Limited (the “Purchaser”) and Hon Po International Limited (the “Vendor I”) and Hon Po Management Limited in relation to the disposal of the entire issued ordinary shares of Metropolis Harbour View Chinese Cuisine Limited (the “Disposed Company”) and all the interests, benefits and rights of and in the shareholders’ loan owed by the Disposed Company to the Vendor I as at the Completion Date at an aggregate consideration of HK$4,410,105 (the “Disposal Agreement”) (a copy of which has been produced to the meeting marked “A” and signed by the Chairman of the meeting for the purpose of identification) be and is hereby approved, ratified and confirmed in all respects and that all transactions contemplated under the Disposal Agreement be and is hereby approved and that any one director of the Company be and is hereby authorised to do or execute all such acts or such other documents which the director may deem to be necessary, desirable or expedient to carry into effect or to give effect to the Disposal Agreement and all transactions contemplated under the Disposal Agreement.”

By Order of the Board China Energy Development Holdings Limited Chui Kwong Kau Executive Director

Hong Kong, 13 August 2010

Registered Office: Cricket Square Hutchins Drive P. O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Principal place of business in Hong Kong: Unit 3607, 36th Floor West Tower, Shun Tak Centre 168-200 Connaught Road Central Hong Kong

* For identification purposes only

– 14 –

NOTICE OF EGM

Notes:

1. A form of proxy to be used for the meeting is enclosed.

2. Where there are joint holders of any share any one of such joint holder may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at any meeting the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the share register of the Company in respect of the joint holding. Several executors or administrators of a deceased member in whose name any share stands shall for the purposes of the bye-laws of the Company be deemed joint holders thereof.

3. Any member entitled to attend and vote at a meeting of the Company shall be entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member. In addition, a proxy or proxies representing either a member who is an individual or a member which is a corporation shall be entitled to exercise the same powers on behalf of the member which he or they represent as such member could exercise.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same. In the case of an instrument of proxy purporting to be signed on behalf of a corporation by an officer thereof it shall be assumed, unless the contrary appears, that such officer was duly authorised to sign such instrument of proxy on behalf of the corporation without further evidence of the fact.

5. The instrument appointing a proxy and (if required by the board of directors (the “Board”) of the Company) the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, shall be delivered to the Hong Kong branch share registrar of the Company, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than forty-eight (48) hours before the time appointed for holding the special general meeting or adjourned meeting.

6. As at the date of this notice, the board of directors of the Company comprises Mr. Zhao Guoqiang, Mr. Chan Shi Yung, Mr. Chui Kwong Kau, Mr. Liu Baohe, Mr. Zhang Zhenming, Mr. Huang Changbi as executive directors; and Mr. Fu Wing Kwok, Ewing, Mr. Yin Guohui and Ms. Zhang Wei as independent non-executive directors.

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