CR Construction Group Holdings Limited — Proxy Solicitation & Information Statement 2006

Jul 3, 2006

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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 and options in Chinese People Gas Holdings Company Limited (the “ Company ”), 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.

CHINESE PEOPLE GAS HOLDINGS COMPANY LIMITED

(incorporated in Bermuda with limited liability)

(stock code: 681)

DISCLOSEABLE TRANSACTION

ACQUISITION OF AN EFFECTIVE 70% INTEREST IN A NATURAL GAS BUSINESS AT YANLIANG DISTRICT, XIAN AND FORMATION OF A NEW JOINT VENTURE COMPANY

A letter from the board of directors of the Company is set out on pages 4 to 8 of this circular.

* For identification only

3 July 2006

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Financial Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Listing Rules implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9

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DEFINITIONS

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

“Acquisition” the acquisition by the Purchaser, through the JV Company, from the Vendor of the Assets pursuant to the terms of the Contract

• “Announcement”

• the announcement issued by the Company dated 9 June 2006 in relation to, among other things, the Acquisition

• “Assets”

• the total assets and liabilities of the Target Company, including its license to operate the natural gas business in Yanliang District, Xian (valid for 30 years commencing from the date of establishment of the JV Company covering the whole Yanliang District, Xian), piped connection network, cash receivables, trade and borrowings and trade and other payables

• “associate(s)” has the meaning ascribed to it under the Listing Rules

• “Board”

• the board of Directors or a duly authorized committee of the board of Directors

• “Company”

Chinese People Gas Holdings Company Limited, an exempted company incorporated in Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange

• “connected person(s)” has the meaning ascribed to it under the Listing Rules

• “Contract”

• the contract dated 8 June 2006 entered into between the Vendor and the Purchaser relating to the Acquisition

• “Directors”

• the directors of the Company

• “Group” the Company and its subsidiaries

• “Hong Kong”

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

• “Independent Third Party(ies)

third party(ies) (and its ultimate beneficial owner) who are independent of, and not connected with, the Company or any connected persons of the Company (and their respective associates) and who are not connected person(s) of the Company

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DEFINITIONS

• “JV Company” the new limited liability company to be established in the PRC which shall be owned as to 70% by the Purchaser and 30% by the Vendor

• “Latest Practicable Date” 29 June 2006, being the latest practicable date prior to the printing of this circular for ascertaining certain information included in this circular

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

• “Option (s)” options granted under the share option scheme of the Company adopted on 4 April 1997

• “PRC” the People’s Republic of China (for the purpose of this circular excluding Hong Kong, the Macau Special Administrative Region and Taiwan)

• “Purchaser” (Beijing Zhong Min Gas Co. Ltd.*), a wholly foreign-owned enterprise established in the PRC and a wholly-owned subsidiary of the Company

• “SFO” Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong)

• “Share(s)” share(s) of HK$0.07 each in the share capital of the Company

• “Shareholder(s)” holder(s) of Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Target Company” (Xian Yanliang District Natural Gas Company*), a state-owned enterprise in the PRC which is 100% owned by the Vendor

• “Vendor” (Xian Yanliang District People’s Government*), the local government of Yanliang District, Xian

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent.

* For identification only

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DEFINITIONS

For the purpose of this circular and for reference only, the following exchange rate has been used for converting Renminbi to Hong Kong dollars:

RMB103.5 = HK$100

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LETTER FROM THE BOARD

CHINESE PEOPLE GAS HOLDINGS COMPANY LIMITED

*

(incorporated in Bermuda with limited liability)

(stock code: 681)

Executive Directors: Mr. Xu Ruixin Mr. Liu Jing Mr. Mo Shikang Mr. Zhu Peifeng Mr. Zhang Hesheng Mr. Jin Song Mr. Yan Wing Cheung

Independent non-executive Directors: Mr. Liu Junmin Mr. Tan Qinglian Mr. Wong Shing Kay, Oliver

Registered office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Head office and principal place of business in Hong Kong: Unit 2113, 21st Floor, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong

3 July 2006

To the Shareholders and for information only, holders of Options

Dear Sirs

DISCLOSEABLE TRANSACTION

ACQUISITION OF AN EFFECTIVE 70% INTEREST IN A NATURAL GAS BUSINESS AT YANLIANG DISTRICT, XIAN AND FORMATION OF A NEW JOINT VENTURE COMPANY

INTRODUCTION

The Board announced on 9 June 2006 that the Vendor and the Purchaser (a wholly-owned subsidiary of the Company) entered into the Contract on 8 June 2006 whereby the Purchaser agreed to acquire an effective 70% interest in the Assets from the Vendor at a consideration of RMB42,500,000 (approximately HK$41,062,802). A new JV Company will be established in which the Purchaser will own a 70% equity interest and the Vendor will own a 30% equity interest. The Assets will be transferred from the Target Company to the JV Company upon completion of the Acquisition.

* For identification only

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LETTER FROM THE BOARD

The Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules. The purpose of this circular is to provide you with further details of the Acquisition under the Contract.

THE CONTRACT

Date: 8 June 2006

Parties:

• (i) the Vendor, the local government in Yanliang District, Xian; and

• (ii) the Purchaser (a wholly-owned subsidiary of the Company).

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendor is a third party independent of the Company and any connected person of the Company, and not a connected person of the Company.

Consideration

Pursuant to the Contract, the Purchaser has agreed to acquire an effective 70% interest in the Assets from the Vendor at a consideration of RMB42,500,000 (approximately HK$41,062,802) (the “ Consideration ”).

The Consideration was determined by commercial negotiations between the parties on an arm’s length basis having regard to the total assets, total liabilities and net asset value of the Target Company of RMB70,833,241 (approximately HK$68,437,914), RMB10,435,361 (approximately HK$10,082,474) and RMB60,397,880 (approximately HK$58,355,440), respectively as at 31 October 2005 (based on an independent valuation report) and represents a premium of approximately 0.5% to 70% of such net asset value.

In accordance with the terms of the Contract, the Consideration was paid on 9 June 2006.

The payment for the Consideration was funded by the Group out of existing internal cash resources.

Formation of the JV Company

Pursuant to the Contract, the Purchaser and the Vendor shall within 20 days after full payment of the Consideration arrange for the establishment of the JV Company and the transfer by the Target Company of all of the Assets (including the novation of existing liabilities, which is RMB13,469,100 (approximately HK$13,013,600)) to the JV Company. The JV Company will be controlled by the Purchaser and its principal activities would be the same as the Target Company, which is the sale and distribution of natural gas; design of gas pipeline and related maintenance in the Yanliang District, Xian, Shaanxi province, the PRC.

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LETTER FROM THE BOARD

Upon establishment of the JV Company and the transfer of the Assets to the JV Company, the Target Company will be de-registered, the Vendor will own a 30% equity interest of the JV Company and the JV Company, which will be a 70% owned subsidiary of the Group, will hold all the Assets and its assets and liabilities will be consolidated into the financial results of the Group. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, neither the Company nor the Group will be required to give any undertaking or guarantee or incur any liabilities with respect to the formation of the JV Company.

Information on the Assets

The Assets comprise of all the assets and liabilities of the Target Company, including its license to operate the natural gas business in Yanliang District, Xian, piped connection network, cash receivables, trade and borrowings and trade and other payables.

The Target Company was established in the PRC in 1998 as a state-owned enterprise, principally engaged in the sale and distribution of natural gas; design of gas pipeline and related maintenance in the Yanliang District, Xian, Shaanxi province, the PRC.

The audited consolidated net profit before / after taxation and extraordinary items of the Target Company for the two years ended 31 December, 2004 and 31 December, 2005 prepared in accordance with the accounting principles generally accepted in the PRC, were as follows:

			**Year **	ended
			31.12.2004	31.12.2005
Net	profit	before taxation and extraordinary items	RMB 192,005	RMB 332,553
			(approximately	(approximately
			HK$185,512)	HK$321,307)
Net	profit	after taxation and extraordinary items	RMB125,343	RMB222,810
			(approximately	(approximately
			HK$121,104)	HK$215,275)

The unaudited consolidated net asset value of the Target Company as at 31 December, 2005 was RMB38,990,419 (approximately HK$37,671,902).

Information on Yanliang District, Xian

Yanliang District is an aviation industrial city in the PRC, principally engaged in aircraft designing and manufacturing, flight testing and related scientific research. The district is about 60 kilometers away from the centre of the city of Xian and covers an area of approximately 244.4 square kilometers. There are a total of approximately 240,000 residents out of whom 100,000 reside in the urban district. The largest aircraft manufacturer in the PRC, Xian Aircraft Industry (Group) Co. Ltd. and many other enterprises and scientific research institutions are located within the district.

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LETTER FROM THE BOARD

In August 2004, the National Development and Reform Commission of the PRC approved the establishment of Yanliang District as the national aviation high-tech industry base. The base is expected to take three to five years to build. The local government expects that the base, upon completion, will become one of the biggest aviation industry sites in Asia, covering an area of approximately 40 square kilometers which will be divided into four parts with different functions, comprising a flight testing area, a manufacturing area, an aviation training center, and a mixed commercial and residential area. Total infrastructure installation costs to be incurred up to its expected completion in 2010 are estimated to amount to approximately RMB2 billion (approximately HK$1.93 billion) and asset investment costs approximately RMB10 billion (approximately HK$9.66 billion).

REASONS FOR THE ACQUISITION

The Group is principally engaged in the distribution, supply and installation of piped natural gas business in the PRC, the holding and leasing of properties in the PRC and the provision of welfare lottery operating systems and ancillary services. The Directors expect that the natural gas business in the PRC has huge growth potential and believe that natural gas will become an important supplement to resolve oil shortage supply in the PRC and would reduce environmental pollution caused by the extraction and exploitation of crude oil.

The Directors expect that due to the continuous development of Yanliang District as one of the national aviation industrial cities in the PRC, the demand for natural gas by industrial users will continue to intensify. As the Directors anticipate that the JV Company can start its business and operation immediately following the transfer of the Assets, the Directors are hopeful that the Acquisition will bring considerable profit and cashflow to the Group and significant returns to the shareholders of the Company. The Directors also believe that the Acquisition will further enhance the market share of the Group in the natural gas business in the PRC and will provide an excellent opportunity for the Group to grow in this promising business sector.

The Acquisition involves the transfer of Assets from a state-owned enterprise to a newly established limited liability company. After consulting with the Company’s PRC legal representatives, the Directors are of the view that the Vendor has obtained sufficient approvals from relevant authorities with respect to such transfer and the JV Company can carry on the Target Company’s license to operate the natural gas business in Yanliang District. The Directors (including the independent non-executive directors of the Company) consider that the terms of the Contract, which were concluded by the parties after arm’s length negotiations, are fair and reasonable and are on normal commercial terms and that the Contract is in the interests of the Company and its shareholders as a whole.

FINANCIAL EFFECT

The financial results of the JV Company will be consolidated into the Group’s financial statements. The Group’s fixed assets, current assets and current liabilities will increase as a result of the consolidation of financial statements of the JV Company. The Group’s cash will decrease to the extent of the aggregate consideration funded from internal resources. The Directors expect there will be a positive impact on the profit attributable to shareholders of the Company in the long term.

– 7 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

Under the Listing Rules, the Acquisition constitutes a discloseable transaction for the Company.

ADDITIONAL INFORMATION

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

Yours faithfully For and on behalf of the Board Mo Shikang Managing and Executive Director

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GENERAL INFORMATION

APPENDIX

A. 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.

B. DISCLOSURE OF INTERESTS

• (i) Save as disclosed below, 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 associated corporations (within the meaning of Part XV of the SFO) which will have to be notified to the Company and the Stock Exchange pursuant to the provisions under Divisions 7 and 8 of Part XV of the SFO (including the interests and short positions which he would be deemed or taken to have under Sections 344 and 345 of the SFO) or the Model Code for Securities Transactions by Directors of Listed Companies, or which will have to be, pursuant to Section 352 of the SFO, entered in the register referred to herein:

Long positions in the Shares

			Approximate
			percentage of the
		Number of	Company’s issued
Name	Capacity	Shares	share capital
Asian Allied Limited	Through a	1,100,798,538	38.15%
(“Asian Allied”) (Note 1)	controlled
	corporation
Super Win Development	Beneficial owner	1,100,798,538	38.15%
Limited (“Super Win”)
Mr. Mo Shikang	Through	1,100,798,538	38.15%
(Notes 1 and 2)	controlled
	corporations

Notes:

1. Asian Allied is interested in the same block of 1,100,798,538 Shares registered under the name of Super Win, its wholly-owned subsidiary.

2. Mr. Mo Shikang is the beneficial owner of 42.75% of the issued share capital of Asian Allied. Pursuant to the provisions of Part XV of the SFO, Mr. Mo Shikang is deemed to be interested in the same block of 1,100,798,538 Shares in which Asian Allied has an attributable interest.

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GENERAL INFORMATION

APPENDIX

Long positions in the underlying Shares of the Company

		Number		Exercise price
Name	Capacity	of Options	Exercise period	Per share
				HK$
Liu Jing	Beneficial owner	26,000,000	12 October, 2005	0.365
			to 3 April, 2007
Zhu Peifeng	Beneficial owner	2,600,000	12 October, 2005	0.365
			to 3 April, 2007
Zhang Hesheng	Beneficial owner	2,600,000	12 October, 2005	0.365
			to 3 April, 2007
Mo Shikang	Beneficial owner	2,600,000	12 October, 2005	0.365
			to 3 April, 2007
Jin Song	Beneficial owner	26,000,000	12 October, 2005	0.365
			to 3 April, 2007
Yan Wing Cheung	Beneficial owner	26,000,000	17 May, 2006	0.400
			to 3 April, 2007

• (ii) Save as disclosed below and Section (B)(i) above, the Directors or chief executive of the Company are not aware of any other person who, as at the Latest Practicable Date, had an interest or short position in the Shares or the underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or who will be interested, directly or indirectly, 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 member of the Group:

Long positions in the Shares or underlying Shares

				Percentage of the
		Capacity and nature	Number of	Company’s issued
**Name **	of shareholder	of interest	shares held	share capital
Asian	Allied	Through a controlled	1,100,798,538	38.15%
		corporation (Note)
Super	Win	Directly beneficially	1,100,798,538	38.15%
		owned (Note)

Note:

Super Win holds 1,100,798,538 Shares of the Company. By virtue of Super Win being a wholly-owned subsidiary of Asian Allied, Asian Allied is deemed to be interested in the 1,100,798,538 Shares held by Super Win.

C. COMPETING INTEREST

None of the Directors or their respective associates has, as at the Latest Practicable Date, any interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

– 10 –

GENERAL INFORMATION

APPENDIX

D. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors or proposed Directors has entered into any existing or proposed service contracts with the Company or any other member of the Group save for those expiring or determinable by the relevant employer within one year without payment of compensation (other than statutory compensation).

E. MATERIAL LITIGATION

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

F. GENERAL

• (i) Ms. Chan Weng Mui is the secretary of the Company. Ms. Chan holds a Bachelor of Laws degree from the Manchester Metropolitan University. She is an associate member of The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.

• (ii) Mr. Yan Wing Cheung is the qualified accountant of the Company. Mr. Yan is a qualified accountant, a fellow member of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants and an associate member of the Chartered Institute of Management Accountants.

• (iii) The Company’s registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda. The principal place of business of the Company in Hong Kong is at Unit 2113, 21st Floor, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong. The branch share registrar and transfer office of the Company in Hong Kong is Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.

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

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