CR Construction Group Holdings Limited — Proxy Solicitation & Information Statement 2003

Jul 31, 2003

IMPORTANT

If you are in any doubt about this circular or as to the action to be taken you should consult your stockbroker, bank manager, solicitor, professional accountant or other professional adviser.

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

==> picture [111 x 37] intentionally omitted <==

KEL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

Executive Directors: Registered Office: Mr. Wang Ke Duan (Chairman) Cedar House Mr. Tjia Boen Sien 41 Cedar Avenue (Managing Director & Deputy Chairman) Hamilton HM12 Mr. Wang Jing Ning Bermuda Mr. Keung Kwok Cheung Mr. Kong Kwok Fai Principal Place of Business: Mr. Song Sio Chong 11th Floor, Nanyang Plaza 57 Hung To Road, Kwun Tong Independent non-executive Directors: Kowloon Mr. Siu Man Po Hong Kong Miss Wong Sin Yee 30 July, 2003

To the shareholders of the Company

Dear Sirs,

PROPOSED GENERAL MANDATES TO REPURCHASE SHARES AND ISSUE NEW SHARES

On 24 July, 2003, the board of directors (the “Directors”) of KEL Holdings Limited (the “Company”) announced the final results of the Company for the year ended 31 March, 2003. Resolutions will be proposed at the annual general meeting of the Company to be held on 9

– 1 –

September, 2003 (the “Annual General Meeting”) to seek, inter alia, shareholders’ approval for the renewal of the general mandates enabling the Directors to issue and allot new shares of the Company (the “Share Issue Mandate”), the renewal of a general mandate enabling the Company to repurchase shares of HK$0.07 each in the capital of the Company (the “Buyback Mandate”) and the renewal of a general mandate enabling the Directors to issue and allot shares representing the aggregate nominal amount of the shares repurchased by the Company under the Buyback Mandate (the “Additional Mandate”).

This circular contains the explanatory statement given in compliance with the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and which gives all the information reasonably necessary to enable shareholders of the Company to make an informed decision as to whether to vote for or against the resolution to approve the Buyback Mandate.

THE BUYBACK MANDATE, THE SHARE ISSUE MANDATE AND THE ADDITIONAL MANDATE

The Buyback Mandate is proposed to enable the Directors to exercise the powers of the Company to repurchase its own issued and fully paid shares up to a maximum of 10 per cent. of the share capital of the Company in issue as at the date of the passing of the ordinary resolution set out as resolution numbered 6 in the notice convening the Annual General Meeting. The authority granted under the Buyback Mandate to the Directors is valid until the conclusion of the next annual general meeting of the Company, or the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company or any applicable law to be held or the date on which the authority given under the Buyback Mandate is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting (whichever is the earlier). The notice convening the Annual General Meeting is enclosed in the annual report of the Company for the year ended 31 March, 2003. The Company at present has no immediate plan to exercise the Buyback Mandate.

In order to ensure flexibility and discretion be given to the Directors in the event that it becomes desirable to issue any additional shares of the Company, approval is being sought from the shareholders for the granting of a general mandate to the Directors to issue new shares in the capital of the Company up to a maximum of 20 per cent. of the total nominal amount of the share capital of the Company in issue as at the date of the passing of the ordinary resolution set out as resolution numbered 5 in the notice convening the Annual General Meeting.

An ordinary resolution will also be proposed at the Annual General Meeting to authorize the extension of the Share Issue Mandate by adding to the nominal amount of the maximum number of shares issuable under the Share Issue Mandate the number of shares representing the aggregate nominal amount of the shares of the Company repurchased by it under the Buyback Mandate.

In accordance with the Listing Rules, this circular serves as an explanatory statement to provide to you with the requisite information as required by the relevant provisions in the Listing Rules which regulate the repurchase by companies with a primary listing on the Stock Exchange of their own securities on the Stock Exchange.

– 2 –

The Directors consider that the Buyback Mandate, the Share Issue Mandate and the Additional Mandate are in the interests of the Company and its shareholders as a whole. Accordingly, the Directors recommend that shareholders of the Company to vote in favour of the resolutions set out as resolutions numbered 5, 6 and 7 in the notice convening the Annual General Meeting.

Yours faithfully, Tjia Boen Sien Managing Director and Deputy Chairman

– 3 –

EXPLANATORY STATEMENT

1. REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and its shareholders to have a general authority from shareholders to enable the Directors to repurchase the Company’s own securities in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and its assets and/or its earnings per share and will only be made when the Directors believe that such repurchases will benefit the Company and its shareholders. The Directors have no present intention to repurchase any of the securities of the Company.

2. SHARE CAPITAL

As at 24 July, 2003, being the latest practicable date prior to the printing of this circular for ascertaining certain information included herein (the “Latest Practicable Date”), the issued share capital of the Company comprised 1,519,420,516 shares of HK$0.07 each (the “Shares”).

Subject to the passing of the resolution approving the Buyback Mandate and assuming no shares will be issued or repurchased by the Company during the period between the Latest Practicable Date and the date of the Annual General Meeting, the Company would be allowed under the Buyback Mandate to repurchase a maximum of 151,942,051 Shares.

3. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum of association and bye-laws and the applicable laws of Bermuda. Bermuda law provides that repurchase may only be effected out of the capital paid up on the repurchased Shares, or out of funds of the Company otherwise available for dividend or distribution or the proceeds of a new issue of Shares made for such purpose. Any premium payable on repurchase may only be paid out of the funds of the Company otherwise available for dividend or distribution or out of the share premium or contributed surplus accounts of the Company.

If the Buyback Mandate were exercised in full, there might be a material adverse effect on the working capital or gearing position of the Company (as compared with the position disclosed in the audited financial statements contained in the annual report of the Company for the year ended 31 March, 2003). However, the Directors do not propose to exercise the Buyback Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements or the gearing levels of the Company which in the opinion of the Directors are from time to time appropriate for the Company.

– 4 –

4. DIRECTORS DEALINGS AND CONNECTED PERSONS

None of the Directors or, to the best of their knowledge and belief having made all reasonable enquiries, their associates, has any present intention if the Buyback Mandate is exercised to sell to the Company or its subsidiaries any Shares.

No connected persons of the Company (as defined in the Listing Rules) has notified the Company that he has any present intention to sell to the Company or its subsidiaries Shares or has undertaken not to do so in the event that the Company is authorized to make repurchases of its own Shares.

5. SHARE PRICES

The highest and lowest prices at which the Shares were traded on the Stock Exchange during each of the previous twelve months were as follows:-

	Trading	Price per Share
	Highest	Lowest
	HK$	HK$
2002
July	0.105	0.070
August	0.100	0.088
September	0.095	0.089
October	0.089	0.070
November	0.075	0.060
December	0.080	0.060
2003
January	0.085	0.060
February	0.082	0.048
March	0.100	0.055
April	0.077	0.064
May	0.085	0.055
June	0.104	0.050

6. SHARE REPURCHASES MADE BY THE COMPANY

No purchase of shares has been made by the Company during the last six months prior to the date of this circular (whether on the Stock Exchange or otherwise).

– 5 –

7. DIRECTORS’ UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Buyback Mandate in accordance with the Listing Rules and the applicable laws of Bermuda.

8. HONG KONG CODE ON TAKEOVERS AND MERGERS

If, on the exercise of the power to repurchase Shares pursuant to the Buyback Mandate, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Hong Kong Code on Takeovers and Mergers (the “Takeovers Code”). Accordingly, a shareholder or a group of shareholders acting in concert (as defined under the Takeovers Code), depending on the level of such increase, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, Super Win Development Limited (“Super Win”), being the single largest shareholder of the Company, was interested in 1,136,724,256 Shares representing approximately 74.81% of the issued share capital in the Company.

In the event that the Buyback Mandate were exercised in full by the Company, the percentage shareholding of Super Win in the Company would increase from approximately 74.81% to approximately 83.13%. Such an increase will decrease the shareholding held by the public to less than 25% as required under Rule 8.08 of the Listing Rules, however, the Directors have no intention to exercise the Buyback Mandate to such an extent as would result in the Shares held by the public drop below 25%.

The Directors are not aware of any consequence which the exercise in full of the Buyback Mandate will have under the Takeovers Code.

– 6 –