Computer And Technologies Holdings Limited — Proxy Solicitation & Information Statement 2003

Nov 19, 2003

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

If you have sold all your shares in China Aerospace International Holdings Limited, you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for shares in CASIL Network System Engineering Limited.

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CHINA AEROSPACE INTERNATIONAL HOLDINGS LIMITED 航天科技國際集團有限公司

(Incorporated in Hong Kong with limited liability)

DISCLOSEABLE TRANSACTION

ISSUE OF SHARES BY CASIL NETWORK SYSTEM ENGINEERING LIMITED

17 November 2003

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
The Strategic Alliance Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Basic information of CNSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Reason and benefit of the transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Listing Rules requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5

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DEFINITIONS

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

• “China”

• The People’s Republic of China, and for the purpose of this circular, excluding Hong Kong, the Macau Special Administrative Region and Taiwan;

• “CNSE”

• CASIL Network System Engineering Limited, a company incorporated in Hong Kong with limited liability, and is expected to be owned as to 49% by the Company and 51% by NWI upon completion of the Subscription;

• “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;

• “Hong Kong”

• The Hong Kong Special Administrative Region of the People’s Republic of China;

• “Latest Practicable Date”

• 17 November 2003, being the latest practicable date for ascertaining information for the purpose of this circular;

• “Listing Rules”

• the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

• “NWI”

• New World Infrastructure Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange;

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited;

• “Strategic Alliance Agreement”

• the strategic alliance agreement dated 27 October 2003 entered into between the Company and NWI;

• “Subscription”

• the subscription by NWI of new shares in the capital of CNSE pursuant to the Strategic Alliance Agreement.

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LETTER FROM THE BOARD

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CHINA AEROSPACE INTERNATIONAL HOLDINGS LIMITED 航天科技國際集團有限公司

(Incorporated in Hong Kong with limited liability)

Executive Directors: Mr. Rui Xiaowu Mr. Zhou Qingquan Mr. Zhao Yuanchang Mr. Wu Hongju Mr. Zhang Tao

Registered Office: 21st Floor China Aerospace Tower Concordia Plaza 1 Science Museum Road Tsimshatsui East Kowloon Hong Kong

Non-executive Directors:

Mr. Lee Hung Sang (Independent)

Ms. Chan Ching Har, Eliza (Independent)

Mr. Chow Chan Lum, Charles (Independent)

Mr. Li Jinsheng Mr. Xu Shilong

Mr. Chen Dingyi

17 November 2003

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION ISSUE OF SHARES BY CASIL NETWORK SYSTEM ENGINEERING LIMITED

INTRODUCTION

It was announced on 28 October 2003 that the Company entered into the unconditional Strategic Alliance Agreement with New World Infrastructure Limited, an independent third party not connected with the directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates (as defined in the Listing Rules) nor does it hold any shares of the Company as at the date of this circular.

The purpose of this circular is to provide you with further information as required under the Listing Rules.

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LETTER FROM THE BOARD

THE STRATEGIC ALLIANCE AGREEMENT

Under the strategic alliance formed under the Strategic Alliance Agreement, the Company and NWI will collectively develop interactive and satellite digital TV in China through a joint venture company.

Pursuant to the Strategic Alliance Agreement, NWI will invest HK$150 million into CNSE by way of subscription in cash for shares representing 51% of its enlarged issued share capital of HK$300,000,000 (as enlarged by the Subscription) to NWI and will thereafter change its name to China Aerospace New World Technology Limited. The joint venture is expected to be owned 51% by NWI and 49% by the Company. The subscription monies are stipulated to be paid within 10 days from the date of the Strategic Alliance Agreement. It is expected that the proceeds of the subscription will be applied by CNSE in the development of interactive and satellite digital TV in China.

The consideration of this transaction was arrived at after arm’s length negotiation between the Company and NWI having regard to the future prospects of the business to be conducted by China Aerospace New World Technology Limited. The Company at present does not have any plan to dispose the 49% stake in CNSE in the near future.

BASIC INFORMATION OF CNSE

CNSE was wholly-owned by the Company prior to the entering into of the Strategic Alliance Agreement. CNSE is an investment holding company. It is currently holding interests in business of network operation and the development of interactive and satellite digital TV in China.

The proforma net book value of CNSE as at 31 December 2002 was HK$50,693,000. The subscription price for 51% of the enlarged capital of CNSE under the Strategic Alliance Agreements is HK$150,000,000. Accordingly, the subscription of the 51% interest in CNSE would be made at a premium of 46% approximately against the net book value. Nevertheless, it is estimated that the valuation of CNSE to be approximately HK$300,000,000, after taking into account the future prospects of CNSE and the subscription.

The unaudited net losses before and after taxation and extraordinary items of CNSE were HK$2,250 and HK$2,250 for the year ended 31 December 2002 respectively and the unaudited net profits before and after taxation and extraordinary items of CNSE were HK$459,561 and HK$459,561 for the year ended 31 December 2001 respectively. In accordance with the Company’s accounting policy, the interest of CNSE after completion will be accounted for as share of result of associates in the consolidated income statement and as share of net assets of associates in the consolidated balance sheet.

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LETTER FROM THE BOARD

REASON AND BENEFIT OF THE TRANSACTION

The Company expects that the strategic alliance with NWI will facilitate its development of interactive and satellite digital TV services in China.

LISTING RULES REQUIREMENTS

The transaction contemplated under the Strategic Alliance Agreement constitutes a discloseable transaction under rule 14.12 of the Listing Rules and is a deemed disposal under Practice Note 13 of the Listing Rules.

GENERAL

Your attention is drawn to the information contained in the Appendix to this circular.

Yours faithfully, Rui Xiaowu

Chairman and President

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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. DISCLOSURE OF INTERESTS

(i) Interests of directors

As at the Latest Practicable Date, no directors or the chief executive of the Company had or was deemed to have any interest or short position in the shares, the underlying shares or debenture of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong)) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance or pursuant to the Model Code for Securities Transaction by Directors of Listed Companies in the Listing Rules, or which be required pursuant to the Securities and Futures Ordinance to enter in the register to be maintained pursuant to section 352 of the Securities and Futures Ordinance.

(ii) Interests of substantial shareholders

As at the Latest Practicable Date, and according to the register of substantial shareholders’ interests maintained pursuant to Part XV of the Securities and Futures Ordinance (Chapter 571) of the Laws of Hong Kong, the following shareholders were interested in 5 per cent., or more of the issued share capital of the Company:

		Proportion to total	Proportion to total
	Number of	issued	share capital
Name	Shares held	of	the Company
China Aerospace Science &	896,818,664		41.86%
Technology Corporation	(Note 1)
Jetcote Investments Limited	896,818,664		41.86%
Burhill Company Limited	393,681,580		18.37%
	(Note 2)
Sin King Enterprises Company	393,272,908		18.36%
Limited	(Note 2)

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APPENDIX

Notes:

1. These 896,818,664 Shares are held by Jetcote Investments Limited, a wholly-owned subsidiary of China Aerospace Science & Technology Corporation, and its subsidiaries.

2. Both 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.

3. SERVICE CONTRACT

None of the Directors has a contract of service with the Company or any of its subsidiaries which is not terminable or expiring within one year without payment of compensation (other than statutory compensation).

4. LITIGATION

So far as the directors are aware and save as disclosed below, no litigation or claims of material importance are pending or threatened by or against the Company or any of its subsidiaries.

CASIL Clearing Limited, a wholly-owned subsidiary incorporated in Hong Kong which holds a valid money lender license under the Money Lenders Ordinance (Chapter 163 of Laws of Hong Kong), made an advance to a third party (“Company A”) in 1997 repayable in 2 years at the interest rate of 15% per annum and was due in 1999. The loan was secured by a piece of land in Peng Chau with an area of around 410,000 square feet and guaranteed by the substantial shareholder and chairman of Company A personally. The outstanding balance of the loan was HK$248,258,089.65 as at 31 December 2002, which represented approximately 30% of the Group’s audited net worth, of HK$804,807,000.00 as at 31 December 2002. A court hearing is scheduled to be held in June 2004 in respect of the above litigation. The substantial shareholder of the Company has undertaken to guarantee the full recovery of the loan.

Company A, its directors, and its substantial shareholder and chairman are independent of and not connected with any of the directors, chief executive or substantial shareholder of the Company or its subsidiaries or any of their respective associates.

CASIL Clearing Limited has been performing an internal settlement role of the Group since incorporation, it used to engage in lending business from 1996 and that business was terminated in 1998.

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APPENDIX

5. MISCELLANEOUS

• (i) Mr. Chan Ka Kin, Ken is the Secretary of the Company. Mr. Chan is an associate member of the Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Company Secretaries.

• (ii) The registered office of the Company is situated at 21st Floor, China Aerospace Tower, Concordia Plaza, 1 Science Museum Road, Tsimshatsui East, Kowloon, Hong Kong.

• (iii) The transfer office of the Company is Standard Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

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