Chinney Alliance Group Limited — Proxy Solicitation & Information Statement 2007

Jun 15, 2007

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 stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Chinney Alliance Group Limited, you should at once hand this circular 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.

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(Stock Code: 385)

DISCLOSEABLE AND CONNECTED TRANSACTION

ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF APEX CURTAIN WALL AND WINDOWS COMPANY LIMITED

15 June 2007

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information of Apex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Information on the Group and the CIL Group . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Reasons for and benefits of the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Financial effects of the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Requirements of the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8

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DEFINITIONS

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

• “Acquisition”

the acquisition of the Sale Shares by the Purchaser from the Vendor pursuant to the Agreement

“Agreement” the sale and purchase agreement dated 22 May 2007 entered into between CCCL, Chinney Contractors, SCI and CAG for the sale and purchase of the Sale Shares

“Apex” Apex Curtain Wall and Windows Company Limited, a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of CCCL

“Board” the board of Directors

“Business Day(s)” a day on which licensed banks in Hong Kong are generally open for business (excluding Saturday, Sunday and public holidays)

“CCCL” or the “Vendor” Chinney Construction Company, Limited, a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of Chinney Contractors

“Chinney Contractors” or the Chinney Contractors Company Limited, a company “Vendor’s Guarantor” incorporated in the British Virgin Islands with limited liability and an 86.05% owned subsidiary of CIL “CIL” Chinney Investments, Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange (Stock Code: 216)

“CIL Group” CIL and its subsidiaries

“Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)

“Company” Chinney Alliance Group Limited, a company incorporated in Bermuda with limited liability and registered in Hong Kong under Part XI of the Companies Ordinance, the shares of which are listed on the main board of the Stock Exchange (Stock Code: 385)

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DEFINITIONS

“Completion” the completion of the Acquisition contemplated under the Agreement “connected person(s)” has the meaning ascribed thereto under the Listing Rules “Consideration” the consideration of HK$298,356 under the Agreement “Director(s)” the director(s) of the Company

“EIL” Enhancement Investments Limited, a company incorporated in the British Virgin Islands with limited liability and is benefically held by Dr. James Sai-Wing Wong solely, holding approximately 25.90% interest in the issued share capital of the Company

“Group” the Company and its subsidiaries “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “Hong Kong” Hong Kong Special Administrative Region of the People’s Republic of China “Latest Practicable Date” 8 June 2007, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

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

• “Multi-Investment”

“Property”

• Multi-Investment Group Limited, a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of CIL holding approximately 29.10% interest in the issued share capital of the Company Workshop No. 19 on the second floor and flat roof of Block A of Hi-Tech Industrial Centre, Nos. 5-21 Pak Tin Par Street, Tsuen Wan, New Territories, Hong Kong

• “Sale Shares”

• 10,000 ordinary shares of HK$1.00 each in the issued share capital of Apex, representing the entire issued share capital of Apex

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DEFINITIONS

“SCI” or the “Purchaser” Shun Cheong Investments Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Shares” the shares of HK$0.10 each in the issued share capital of the Company “Shareholders” the shareholders of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “subsidiary” has the meaning ascribed to it under the Companies Ordinance “%” per cent.

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LETTER FROM THE BOARD

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(Stock Code: 385)

Executive Directors: James Sai-Wing Wong (Chairman) Sek-Kee Yu Frank Kwok-Kit Chu Yuen-Keung Chan Wai-Hong Ling

Non-Executive Director: Herman Man-Hei Fung

Independent Non-Executive Directors: William Gage McAfee David Chung-Shing Wu Sou-Tung Chan

Registered office: Clarendon House Church Street Hamilton HM11 Bermuda

Head office and principal place of business: 23rd Floor Wing On Centre 111 Connaught Road Central Hong Kong

15 June 2007

To the Shareholders and option holders (for information only)

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF APEX CURTAIN WALL AND WINDOWS COMPANY LIMITED

INTRODUCTION

On 22 May 2007, CCCL (as Vendor), Chinney Contractors (as Vendor’s Guarantor), SCI (as Purchaser) and the Company (as Purchaser’s Guarantor) entered into the Agreement pursuant to which CCCL has agreed to sell and SCI has agreed to purchase the Sale Shares, being the entire issued share capital of Apex, for a cash consideration of HK$298,356. The Consideration has been arrived at after arm’s length negotiations between the parties on normal commercial term and taking reference to the unaudited net deficit of HK$29,468 of Apex as at 31 January 2007 and the market value of the Property of HK$1,040,000 as at 11 May 2007 as determined by an independent valuer.

The purpose of this circular is to provide you with further information in relation to the Acquisition under the Agreement.

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LETTER FROM THE BOARD

THE AGREEMENT

Date of the Agreement

22 May 2007

Parties to the Agreement

Vendor : CCCL, a wholly-owned subsidiary of Chinney Contractors Purchaser : SCI, a wholly-owned subsidiary of the Company Vendor’s Guarantor : Chinney Contractors, an 86.05% owned subsidiary of CIL Purchaser’s Guarantor : The Company

Interest being acquired of

CCCL has agreed to sell to SCI and SCI has agreed to purchase from CCCL the Sale Shares, being the entire issued share capital of Apex. Upon Completion, SCI has owned the entire interest in Apex and CCCL has ceased to have any interest in Apex.

Consideration for the Acquisition

The consideration of the Sale Shares was HK$298,356. The Consideration was arrived at after arm’s length negotiations between the parties on normal commercial terms and taking reference to the unaudited net deficit of Apex of HK$29,468 as at 31 January 2007 and the market value of the Property of HK$1,040,000 as at 11 May 2007 as determined by an independent valuer.

Payment Terms

The Consideration has been satisfied by cash in full upon Completion on 1 June 2007.

Chinney Contractors has guaranteed the due and punctual performance and obligations of CCCL under the Agreement.

The Company has guaranteed the due and punctual performance and obligations of SCI under the Agreement.

Completion

Completion of the Acquisition took place on 1 June 2007.

Following the Completion, Apex became a wholly-owned subsidiary of SCI.

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LETTER FROM THE BOARD

INFORMATION OF APEX

Apex was a wholly-owned subsidiary of CCCL immediately before the Completion and is engaged in contracting of building aluminium works. Apex is the sole owner of the Property. The Property has a market value of HK$1,040,000 as at 11 May 2007 as determined by an independent valuer.

The table below sets out certain audited financial information on Apex for the two financial years ended 31 March 2005 and 2006 respectively:

	2006	2005
	HK$’000	HK$’000
Audited net profit/(loss) before taxation and
extraordinary items	(265)	134
Audited net profit/(loss) after taxation and
extraordinary items	(223)	490
Net assets	210	433

INFORMATION ON THE GROUP AND THE CIL GROUP

The Vendor is a subsidiary of CIL. CIL is an investment holding company. Its subsidiaries are principally engaged in superstructure construction work, foundation piling, garment manufacturing and trading, property development, property investment and property related businesses and general investment.

The Company is an investment holding company. Its subsidiaries are principally engaged in trading of plastics and chemicals, distribution and installation of building supplies, electrical and mechanical products, building related contracting services for both public and private sectors and investment holding.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Board considers the Acquisition gives an opportunity to expand the Group’s activities in the construction industry.

The Board, including the independent non-executive Directors, considers that the Acquisition is fair and reasonable and in the interests of the Shareholders as a whole.

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LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE ACQUISITION

The Consideration has been settled in cash on Completion and was financed by internal resources of the Company. Upon Completion, Apex has become an indirect wholly-owned subsidiary of the Company and its earnings, assets and liabilities will be consolidated into the future consolidated financial statements of the Group.

REQUIREMENTS OF THE LISTING RULES

As the relevant percentage ratio in respect of the Company (as defined in Rule 14.07 of the Listing Rules) exceeds 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company.

CCCL is an 86.05% owned subsidiary of CIL which is a substantial shareholder of the Company (CIL is currently holding approximately 29.10% interest in the issued share capital of the Company through its wholly-owned subsidiary, Multi-Investment). Also, Mr. YuenKeung Chan, an executive director of the Company, has a 13.95% deemed interest in CCCL through his holding of 13.95% direct interest in Chinney Contractors. Accordingly, CCCL is a connected person of the Company within the meaning of the Listing Rules and the Acquisition also constitutes a connected transaction of the Company under the Listing Rules. As the applicable percentage ratios exceed 2.5% but less than 25% and the total consideration is less than HK$10,000,000, the Acquisition is subject to the reporting and announcement requirements and is exempt from the approval by the independent Shareholders pursuant to Rule 14A.32 of the Listing Rules.

ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board Chinney Alliance Group Limited James Sai-Wing Wong Chairman

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GENERAL INFORMATION

APPENDIX

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, there are no other facts the omission of which would make any statement herein misleading.

DISCLOSURE OF DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors in the shares, underlying shares and debentures of the Company and its associated corporations (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 or short positions which they were taken or deemed to have under such provisions of the SFO) or which were required to be entered in the register maintained by the Company pursuant to Section 352 of the SFO or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, were as follows:

(a) Directors’ interests in the Shares of the Company

Name of Directors James Sai-Wing Wong Frank Kwok-Kit Chu	Number of shares held, capacity and nature of interest Percentage of the Company’s issued share capital Personal interests Family interests Corporate interests Total – – 218,138,283 (Note) 218,138,283 55.00 48,240 47,840 – 96,080 0.02

All the interests stated above represent long positions.

Note: Among these shares, 115,395,797 shares are held by Multi-Investment and 102,742,486 shares are held by EIL, in both of which Dr. James Sai-Wing Wong is a director and have beneficial interests.

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GENERAL INFORMATION

APPENDIX

(b) Directors’ interests in options/underlying shares granted by the Company

			Exercise	Number of
	Date of		price per	options
Name of Directors	grant	Exercise period	share	outstanding
			HK$
Sek-Kee Yu	16 July 1999	16 July 1999 to	0.70	1,200,000
		15 July 2009
Frank Kwok-Kit Chu	13 July 1999	13 July 1999 to	0.70	800,000
		12 July 2009
Herman Man-Hei Fung	13 July 1999	13 July 1999 to	0.70	800,000
		12 July 2009

Save as disclosed in this circular, so far as was known to any Director as at the Latest Practicable Date, none of the Directors had any interest or short position in the Shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of the 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 the Director is taken or deemed to have under such provisions of the SFO), or which were required to be entered in the register maintained by the Company pursuant to Section 352 of the SFO or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX

SUBSTANTIAL SHAREHOLDERS

• (a) As at the Latest Practicable Date, so far as was known to any Director, the following persons had interests or short positions in the Shares and underlying shares of the Company which would fall to be disclosed to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO:

				Percentage
				of the
			Number of	Company’s
		Capacity and	ordinary	issued share
Name of Shareholders	Notes	nature of interest	shares held	capital
James Sai-Wing Wong	1, 2	Interest through	218,138,283	55.00
		controlled
		corporations
Madeline May-Lung	1	Interest through a	115,395,797	29.10
Wong		controlled corporation
Lucky Year Finance	1	Interest through a	115,395,797	29.10
Limited		controlled corporation
Chinney Holdings	1	Interest through a	115,395,797	29.10
Limited		controlled corporation
CIL	1	Interest through a	115,395,797	29.10
		controlled corporation
Newsworthy Resources	1	Interest through a	115,395,797	29.10
Limited		controlled corporation
Multi-Investment	1	Beneficial owner	115,395,797	29.10
EIL	2	Beneficial owner	102,742,486	25.90

All the interests stated above represent long positions.

Notes:

1. Dr. James Sai-Wing Wong, Ms. Madeline May-Lung Wong, Lucky Year Finance Limited, Chinney Holdings Limited, CIL, Newsworthy Resources Limited and Multi-Investment are deemed to be interested in the same parcel of 115,395,797 shares by virtue of Section 316 of the SFO; and

2. EIL is beneficially owned by Dr. James Sai-Wing Wong solely.

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GENERAL INFORMATION

APPENDIX

• (b) So far as was known to any Director, as at the Latest Practicable Date, the following persons were directly or indirectly interested in 10% 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 other than the Company and the amount of such persons’ interests in such securities were as follows:

		Approximate
Name of person having 10%		percentage of
or more interest	Name of member of the Group	interest held
Howing Engineering Limited	Shun Wing Construction &	49.90
	Engineering Company Limited
Shu-Lin Lin	Shun Cheong Shenzhen Jianda	30.00
	Joint Venture Company Limited
Koon-Hung Lo	Shun Cheong Automation Systems	15.00
	Limited

Save as disclosed in this circular, the Directors are not aware of any person as at the Latest Practicable Date who had an interest or short position in the Shares or 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, was directly or indirectly, interested in 10% or more of the nominal value of the issued share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group other than the Company, or any options in respect of such capital.

SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has entered or is proposing to enter into any service contract with any member of the Group (excluding contracts expiring or determinable within one year without payment of compensation (other than statutory compensation)).

LITIGATION

As at the Latest Practicable Date, there were no pending or threatened litigations or claims of material importance against any members of the Group.

COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or their respective associates (as defined in the Listing Rules) had any interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Company.

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GENERAL INFORMATION

APPENDIX

GENERAL

• (a) The registered office of the Company is situated at Clarendon House, Church Street, Hamilton HM 11, Bermuda.

• (b) The head office and principal place of business of the Company is at 23rd Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong.

• (c) The Hong Kong branch share registrars and transfer office of the Company is Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

• (d) The company secretary of the Company is Mr. Yun-Sang Lo, BBA, CPA, FCCA.

• (e) The qualified accountant of the Company is Miss Pui-Shan Chan, CPA.

• (f) The English text of this circular shall prevail over the Chinese text for the purpose of interpretation.

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