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

Apr 27, 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, make no representation as to its accuracy or completeness and expressly disclaim 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 51% EQUITY INTEREST IN WEI NAN CITY NATURAL GAS COMPANY

A letter from the board of directors of the Company is set out on pages 3 to 7 of this circular.

* For identification only

27 April, 2006

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Equity Transfer Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Financial Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Listing Rules implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8

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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 from the Vendor of a 51% equity interest in the Target Company pursuant to the terms of the Equity Transfer Contract

• “Announcement” the announcement issued by the Company dated 4 April, 2006 in relation to, among other things, the Acquisition

• “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

• “Business Days” any day (other than a Saturday, a Sunday or a public holiday) on which banks in Hong Kong are generally open for business

• “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

• “Directors” the directors of the Company

• “Equity Transfer Contract”

• the equity transfer contract dated 31 March, 2006 entered into between the Vendor and the Purchaser relating to the Acquisition

• “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

• “Latest Practicable Date”

25 April 2006, being the latest practicable date prior to the printing of this circular for ascertaining certain information included in this circular

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DEFINITIONS

“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$0.07 each in the share capital of the Company “Shareholder(s)” holder(s) of Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Target Company” (Wei Nan City Natural Gas Company), a limited liability company established in the PRC which is owned as to 51% by the Vendor and 49% by (Shaanxi Natural Gas Limited Liability Company) which is an Independent Third Party “Vendor” (Wei Nan City Development Company*), a company incorporated in the PRC with limited liability and an Independent Third Party “HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent.

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

RMB103.41 = HK$100

* For identification only

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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 27 April, 2006

To the Shareholders and for information only, holders of Options

Dear Sirs,

DISCLOSEABLE TRANSACTION

INTRODUCTION

The Board announced on 4 April, 2006 that the Vendor and the Purchaser (a wholly-owned subsidiary of the Company) entered into the Equity Transfer Contract on 31 March, 2006 whereby the Purchaser agreed to acquire a 51% equity interest in the Target Company from the Vendor at a provisional consideration of RMB33,000,000 (approximately HK$31,911,807), which is subject to certain adjustments. The Vendor will also procure that the Purchaser will obtain the exclusive right to operate the business of supplying natural gas within the city of Wei Nan in Shaanxi province, the PRC (the “ Business ”).

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 Equity Transfer Contract.

* For identification only

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LETTER FROM THE BOARD

THE EQUITY TRANSFER CONTRACT

Date: 31 March, 2006

Parties:

• (i) the Vendor (an Independent Third Party) whose principal business is the holding of its investments in Wei Nan City in Shaanxi province, the PRC; 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 enquires, the Vendor and its ultimate beneficial owner are third parties independent of the Company and its connected persons (and their respective associates).

Consideration

Pursuant to the Equity Transfer Contract, the Purchaser has agreed to acquire a 51% equity interest in the Target Company from the Vendor at the provisional consideration of RMB33,000,000 (approximately HK$31,911,807), subject to adjustments (the “ Consideration ”).

The provisional amount of the Consideration was determined by commercial negotiations between the parties on an arm’s length basis having regard to the unaudited net asset value of the Target Company of RMB44,986,435 (approximately HK$43,502,983) as at 31 December, 2005 (based on the unaudited accounts of the Target Company prepared in accordance with the accounting principles generally accepted in the PRC) and after considering the right to operate the Business.

The provisional amount of the Consideration represents a premium of approximately 43.83% to the amount of RMB22,943,082 (approximately HK$22,186,522), representing 51% (being the equity interest which is the subject of the Acquisition) of the unaudited net tangible asset value of the Target Company as at 31 December, 2005.

Wei Nan City is located in Shaanxi province, the PRC and has a total population of 5.31 million. The area of (Lin Wei Qu) where the local government is based and where the Target Company principally operates, has a population of 0.88 million. With a gross domestic product of RMB31.2 billion (approximately HK$30.2 billion) in 2005 (an increase of 11.7% as compared with 2004) in Wei Nan City. Given the substantial development potential of the natural gas business in Wan Nan City, PRC, the Directors believe that the right to operate the Business would justify such a premium.

Adjustment to the Consideration

The Consideration will be adjusted to an amount equal to 51% of the net asset value of the Target Company as at 31 December, 2005 and the value of the right to operate the Business, in each case to be determined in accordance with an appraisal by independent valuers to be appointed by the Company (the “ Final Consideration ”). There is no upper or

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LETTER FROM THE BOARD

lower limit to the Final Consideration (as adjusted). At the Latest Practicable Date, the independent valuers are carrying out the appraisal and the Final Consideration is not yet determined.

Pursuant to the Equity Transfer Contract, the Consideration (as adjusted) is payable/ was paid by the Purchaser in the following manner:

• (i) RMB1,000,000 (approximately HK$967,024), as deposit and part payment of the Consideration, which was paid on 4 April, 2006;

• (ii) an amount representing 15% of the Final Consideration is payable within 30 Business Days from the date of the Equity Transfer Contract;

• (iii) an amount representing 25% of the Final Consideration is payable within 30 Business Days from the date of registration of the Purchaser as the holder of the 51% equity interest in the Target Company with the State Administration for Industry and Commerce of the PRC; and

• (iv) the remaining balance of the Final Consideration is payable within 3 months on which the Target Company will have obtained re-registration of title to certain property interests which were previously allocated to the Target Company as state-owned land.

The payment for the Consideration will be funded by the Group out of its existing internal cash resources and/or bank borrowings to be arranged which the Group may consider to be appropriate for this purpose. Following the Acquisition, the Target Company will be accounted for in the Group’s financial results as a subsidiary of the Company.

Upon completion of the Equity Transfer Contract, the Group will hold 51% equity interest in the Target Company.

It is provided in the Equity Transfer Contract that the Vendor will also procure that the Purchaser will obtain the exclusive right to operate the business of supplying natural gas within the city of Wei Nan in Shaanxi province, the PRC for a period of 30 years from the date of the Equity Transfer Contract.

Information on the target company

The Target Company was established in the PRC in 2003 and is principally engaged in the supply and distribution of natural gas; sales and installation of natural gas connection facilities and related network design in the city of Wei Nan in Shaanxi province, the PRC. The registered capital of the Target Company is RMB32,000,000 (approximately HK$30,944,783), all of which is fully paid. The Target Company is currently owned as to 51% by the Vendor and 49% by a PRC party which, to the best of the Directors’ knowledge, informing and belief having made all reasonable enquiries, is an Independent Third Party.

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LETTER FROM THE BOARD

The Target Company did not engaged in any operations except for the setting up of natural gas distribution network for the years ended 31 December, 2004 and 2005, respectively. Such activities would not have any financial impact on the profit and loss accounts of the Target Company during that period. The unaudited net asset value of the Target Company was RMB44,986,435 (approximately HK$43,502,983) for each of the years ended 31 December, 2004 and 2005, respectively which mainly includes cash, receivables and the construction costs for its natural gas distribution facilities.

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 would reduce pollution and act as a reliable energy supplement to oil, a commodity the supply of which is increasingly under pressure.

Wei Nan City is located in Shaanxi province, the PRC and has a total population of 5.31 million. The area of (Lin Wei Qu) where the local government is based and where the Target Company principally operates, has a population of 0.88 million. With a gross domestic product of RMB31.2 billion (approximately HK$30.2 billion) in 2005 (an increase of 11.7% as compared with 2004) in Wei Nan City, the Board expects that demand for natural gas by commercial and residential consumers in Wei Nan City would continue to grow, which would act as a major revenue source to the Group’s business following the Target Company becoming a subsidiary of the Group.

The Directors believe that the Acquisition represents an invaluable opportunity for the Group to quicken the pace of its development in this business segment and to create business synergy of its existing business with the business of the Target Company.

The Directors (including the independent non-executive directors of the Company) consider that the terms of the Equity Transfer 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 Equity Transfer Contract is in the interests of the Company and its shareholders as a whole.

FINANCIAL EFFECT

Upon completion of the Acquisition, the financial results of the Target Company will be consolidated into the Group’s financial statements. The Group’s fixed assets, current assets, current liabilities and long term liabilities will increase as a result of the consolidation of financial statements of the Target Company. The Group’s cash will decrease in portion to the amount of the aggregate consideration funded from internal resources, and liabilities will increase by the amount of the aggregate consideration funded from bank borrowings. The Directors expect there will be a positive impact on the profit attributable to shareholders of the Company in the long term. The Directors confirm that in view of the

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LETTER FROM THE BOARD

existing financial and operation conditions of the Company and taking into account payments of the consideration mentioned above for the Acquisition, the Group will have sufficient working capital for the operation of its business after making such payments.

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

				Exercise
		Number of		price per
Name	Capacity	Options	Exercise period	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 Heshang	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	Beneficial owner	26,000,000	17 May, 2006 to	0.400
Cheung			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 Company’s
Name of	Capacity and	Number of	issued share
shareholder	nature of interest	shares held	capital
Asian Allied	Through a controlled	1,100,798,538	38.15%
	corporation (Note 1)
Super Win	Directly beneficially	1,100,798,538	38.15%
	owned (Note 1)

Note:

1. 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.

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GENERAL INFORMATION

APPENDIX

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.

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) Mr. Ong Chi King is the secretary of the Company. Mr. Ong holds a bachelor degree in Business Administration from the Hong Kong University of Science and Technology. He is a fellow of the Association of Chartered Certified Accountants and a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants.

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