Computer And Technologies Holdings Limited — Capital/Financing Update 2006

Nov 17, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

If you have sold or transferred all your shares in China Aerospace International Holdings 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.

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

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(Stock Code: 0031)

DISCLOSEABLE TRANSACTION

THE ESTABLISHMENT OF THE JOINT VENTURE COMPANY IN THE DEVELOPMENT OF THE AEROSPACE TECHNOLOGY PARK IN SHANGHAI

A letter from the Board of Directors of the Company is set out on pages 3 to 6 of this circular.

16 November 2006

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

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DEFINITIONS

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

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||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|“Company”|China|Aerospace|International|Holdings|Limited,|a|
|company|incorporated|in|Hong|Kong|with|limited|
|liability,|the|shares|of|which|are|listed|on|the|Stock|
|Exchange;|
|“Group”|the|Company|and|its|subsidiaries;|
|“HK$”|Hong|Kong|dollars,|the|legal|currency|of|the|Hong|Kong|
|Special|Administrative|Region|of|the|PRC;|
|“Joint|Venture|Company”|(Shanghai|
|Aerospace|Technology|Investment|Company|Limited),|
|the|joint|venture|company|to|be|established|by|New|
|Century|and|Shanghai|Minhang|in|the|PRC|as|a|limited|
|liability|company|pursuant|to|the|Promoters’ Agreement;|
|“Latest|Practicable|Date”|14 November 2006, 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|of|Hong|Kong|Limited;|
|“New|Century”|(CASIL|New|
|Century|Technology|Development|(Shenzhen)|Company|
|Limited),|a|wholly-owned|subsidiary|of|the|Company|
|established|in|the|PRC|as|a|limited|liability|company;|
|“Park”|the|Aerospace|Technology|Park,|to|be|established|by|the|
|Joint|Venture|Company;|
|“PRC”|the|People’s|Republic|of|China|(for|the|purpose|of|this|
|announcement,|excluding|the|Hong|Kong|Special|
|Administrative|Region,|the|Macau|Special|
|Administrative|Region|and|Taiwan);|
|“Promoters’ Agreement”|the|Promoters’|Agreement|dated|26|October|2006|and|
|entered|into|by|New|Century|and|Shanghai|Minhang;|
|“RMB”|Reminbi,|the|legal|currency|of|the|PRC;|

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DEFINITIONS

“SAIC” (Shanghai Administration for Industry and Commerce); and “Shanghai Minhang” (Shanghai Minhang Investment Construction Company Limited)*, a company established in the PRC as a limited liability company.

For the purpose of this circular, the exchange rate of RMB:HK$ is RMB1.04:HK$1.00.

• These companies do not have English names. The English name is inserted herein for identification purpose only.

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LETTER FROM THE BOARD

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(Stock Code: 0031)

Executive Directors: Mr Zhao Liqiang (President) Mr Zhou Qingquan Mr Zhao Yuanchang Mr Wu Hongju Mr Guo Xianpeng

Registered Office: Room 1103-1107A 11th Floor, One Harbourfront 18 Tak Fung Street, Hung Hom Kowloon Hong Kong

Non-executive Directors: Mr Ma Xingrui (Chairman) Mr Gong Bo Mr Chen Dingyi Ms Chan Ching Har, Eliza Mr Wang Yujun Mr Xu Jianhua

Independent Non-executive Directors: Mr Lee Hung Sang Mr Chow Chan Lum, Charles Mr Luo Zhenbang

16 November 2006

To the shareholders of the Company

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

THE ESTABLISHMENT OF THE JOINT VENTURE COMPANY IN THE DEVELOPMENT OF THE AEROSPACE TECHNOLOGY PARK IN SHANGHAI

On 26 October 2006, the Board of Directors of the Company announced that New Century, its wholly-owned subsidiary, had entered into the Promoters’ Agreement on 26 October 2006 in respect of the establishment of a joint venture to develop, manage and operate the Aerospace Technology Park in Shanghai, the PRC.

The purpose of this circular is to provide further information in respect of the joint venture and other information of the Company in accordance with the requirements of the Listing Rules.

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LETTER FROM THE BOARD

THE PROMOTERS’ AGREEMENT DATED 26 OCTOBER 2006

Parties:

1. New Century, a wholly-owned subsidiary of the Company

2. Shanghai Minhang

To the best of the knowledge, information and belief of the Company’s Directors, having made all reasonable enquiries, Shanghai Minhang and its ultimate beneficial owner are third parties independent of the Company and its connected persons and are not connected persons of the Group.

Business scope of the Joint Venture Company:

The business of foundation facilities construction, residential property development and construction, gardening, installation engineering, construction engineering, municipal engineering, property management, technology development, transfer, services and consultation in the fields of energy and computer system, etc.

Principal activities of the Joint Venture Company:

The development, management and operation of the Aerospace Technology Park.

Establishment of the Joint Venture Company:

Term:

50 years from the date of issue of the business license of the Joint Venture Company

Total registered capital: RMB200,000,000 (in HK$ equivalent) (HK$192,307,692.30)

Share of registered capital: New Century Shanghai Minhang RMB160,000,000 RMB40,000,000 (in HK$ equivalent) (HK$153,846,153.85) (HK$38,461,538.46) (% of total registered capital) (80%) (20%) Payment of registered capital 1st instalment in cash at the time of registration at the SAIC: RMB80,000,000 RMB20,000,000 2nd instalment in cash within 1 year from the date of establishment of the Joint Venture Company: RMB80,000,000 RMB20,000,000

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LETTER FROM THE BOARD

The establishment of the Joint Venture Company is subject to obtaining relevant approval from the PRC government authorities (including the SAIC). It is expected that the Joint Venture Company will be established within 2006 and will be consolidated as subsidiary in the accounts of the Group.

The board of the Joint Venture Company will compose of nine members, three directors will be nominated by Shanghai Minhang and six directors will be nominated by New Century.

Termination:

In the event that the Joint Venture Company fails to be established, the costs incurred in the establishment of the Joint Venture Company shall be split between New Century and Shanghai Minhang in proportion to their respective contributions to the registered capital of the Joint Venture Company. The party in default leading to the failure of the establishment of the Joint Venture Company shall compensate the other party for its losses.

The Aerospace Technology Park

The Aerospace Technology Park will be established in Minhang District, Shanghai, the PRC. Enterprises engaged in aerospace and advanced-technology industries may be admitted into the Park.

It is intended that the registered capital of the Joint Venture Company will be applied towards the development of the basic foundation of the park and the management and operation of the Park.

Reasons for and benefit of investing in the Joint Venture Company

The Group is principally engaged in business of technological engineering, property investment and advanced technology-related manufacturing.

The Directors considered that the Company would benefit from the entering into of the Promoters’ Agreement. The Aerospace Technology Park to be developed, managed and operated by the Joint Venture Company will serve as a platform to actively explore and realise orderly mergence and interactive development of aerospace and advanced-technology industries in the PRC. As the developer, manager and operator of the Aerospace Technology Park, the Joint Venture Company will ensure that the projects of enterprises of the Aerospace Technology Park meet the relevant requirements of the Shanghai Municipal People’s Government, and assist enterprises entering the Aerospace Technology Park to attract capital investments or the Joint Venture Company may invest directly in potential hi-tech enterprises. As such, the transaction will strengthen the Group’s property investment and advanced technology-related investment. Given the recent positive prospects of developing industrial zone, technology zone and related property in mainland China, the Company would benefit from the development and operation of the Aerospace Technology Park.

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LETTER FROM THE BOARD

The terms of the Promoters’ Agreement are negotiated after arm’s length negotiation. The Directors (including the Independent Non-executive Directors) of the Company consider that the transaction was entered into on normal commercial terms and the terms of the Promoters’ Agreement are fair and reasonable and in the interests of the shareholders of the Company as a whole.

Funding

Pursuant to the Promoters’ Agreement, the amount of investment made by each party is restricted to their respective contributions in the registered capital of the Joint Venture Company. The funding of New Century’s capital contribution will be by way of internal resources.

Financial effects of the Transaction

Upon establishment, the Joint Venture Company will become a 80% owned subsidiary of the Company. In accordance with the Company’s accounting policy, the interest of the Joint Venture Company will be consolidated into the financial statements of the Group and the minority interest will be reduced accordingly. It is expected that the Joint Venture Company will devote most of its resources in foundation facilities works and may not contribute any profit to the Group during the early development stage of the Park.

Information on the joint venture partner

Shanghai Minhang is a limited liability company established in Shanghai and engages in the business of industry investment, property development and operation, gardening, installation engineering, construction engineering, municipal engineering, sale of construction materials, steel materials and metallic materials, technology development, transfer, services and consultation in aerospace technology.

Discloseable Transaction

As the percentage ratios in respect of the transaction under the Promoters’ Agreement are more than 5% but less than 25%, the investment by New Century in the Joint Venture Company would constitute a discloseable transaction under the Chapter 14 of the Listing Rules.

By order of the Board of Directors Ma Xingrui Chairman

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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 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.

2. DIRECTORS AND CHIEF EXECUTIVE’S INTERESTS IN SECURITIES

As at the Latest Practicable Date, none of the Directors and chief executive of the Company or their respective associates had any interest or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which are 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), or to be recorded in the register required to be maintained pursuant to Section 352 of the SFO, or otherwise to be notified to the Company or the Stock Exchange pursuant to the Model Code for Securities Transaction by Directors of Listed Issuers in the Listing Rules.

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, the register of substantial Shareholders maintained by the Company pursuant to section 336 of the SFO shows that the following Shareholders had notified the Company of relevant interests of 5% or more in the issued share capital of the Company.

Name of shareholder Capacity China Aerospace Science & Technology Corporation Held by controlled corporations Jetcote Investments Limited Beneficial owner Held by controlled corporations (Note b) Burhill Company Limited Beneficial owner (Note b) Sin King Enterprises Company Limited Beneficial owner (Note b)	Number of shares held for long positions 905,221,064 (Note a) 109,864,176 793,356,888 905,221,064 402,083,980 393,272,908	Percentage of issued share capital of the Company 42.25% 5.13% 37.12%
		42.25% 18.76% 18.36%

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GENERAL INFORMATION

APPENDIX

Notes:

• (a) These 905,221,064 Shares are duplicated in the interests held by Jetcote Investments Limited, a wholly-owned subsidiary of China Aerospace Science & Technology Corporation, and its subsidiaries.

• (b) All these companies are wholly-owned subsidiaries of Jetcote Investments Limited. The Shares held by them form part of the total number of Shares held by Jetcote Investments Limited.

Save as disclosed herein, as at the Latest Practicable Date, the Directors or chief executive of the Company are not aware of any other person who has an interest or short position in the Shares and underlying Shares of the Company which would be required to be disclosed under Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 5% or more in the issued share capital of the members of the Group.

As at the Latest Practicable Date, there were no outstanding securities, options or warrants which were convertible into new Shares.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into, or was proposing to enter into any service contract with the Company or any member of the Group (except those expiring or determinable by the Company within a year without payment of compensation other than statutory compensation).

5. COMPETING INTEREST OF DIRECTORS AND ASSOCIATES

As at the Latest Practicable Date, none of the Directors and their respective associates were considered to have interests in any business which competes or is likely to compete, either directly or indirectly, with the businesses of the Group pursuant to the Listing Rules.

6. LITIGATION

Save as disclosed below, as at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration or claim of material importance and, so far as the Directors were aware, no litigation or claims of material importance are pending or threatened by or against any member of the Group.

A wholly-owned subsidiary of the Company, CASIL Clearing Limited (“CASIL Clearing”), was named as a defendant in a litigation in respect of an alleged breach of a loan agreement (the “Loan Agreement”) in failing to advance the full amount of HK$330,000,000 to an independent third party company (the “Borrower”) in 1997. Concurrently, CASIL Clearing resisted the claim and counterclaimed against the Borrower and sued against its guarantor upon default on, including but not limited to, interest and payment under the loan amount advanced under the Loan Agreement and the mortgage.

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APPENDIX

GENERAL INFORMATION

On 30 July 2004, the Court judged that the Borrower was entitled to damages consequent upon CASIL Clearing’s breach of the Loan Agreement. However, CASIL Clearing was also entitled to repayment of principal outstanding under the Loan Agreement and interest thereon according to the terms of the Loan Agreement and to the judgment against both the owners of the pledged assets under the mortgage and the guarantor under the guarantee. The aforesaid information had been disclosed in the Company’s annual reports and interim reports since 2003. Both CASIL Clearing and the Borrower have arranged for further directions as to the assessment of damages in October 2006 but no judgement has been made by the Court as at the Latest Practicable Date.

The Borrower, its directors, and its substantial shareholder and chairman are all independent third parties.

7. GENERAL

• (a) The company secretary of the Company is Mr Chan Ka Kin, Ken. Mr Chan is a fellow member of both the Institute of Chartered Secretaries and Administrators, UK and the Hong Kong Institute of Chartered Secretaries.

• (b) The qualified accountant of the Company is Mr Luk Chi Keung. Mr Luk 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 share registrar of the Company is Standard Registrars Limited, of 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.

• (d) The English text of this circular shall prevail over the Chinese text.

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