Da Sen Holdings Group Limited — Proxy Solicitation & Information Statement 2004

Feb 23, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or otherwise transferred all your shares in Asia Tele-Net and Technology Corporation Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular and the accompanying form of proxy, makes any 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 and the accompanying form of proxy.

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MAJOR TRANSACTION

RELATING TO THE SALE OF SHARES IN INTECH MACHINES COMPANY LIMITED

A notice convening a special general meeting of Asia Tele-Net and Technology Corporation Limited to be held at 11 Dai Hei Street, Tai Po Industrial Estates, New Territories, Hong Kong at 11:30 a.m. on Tuesday, 9 March 2004 is set out on pages 18 to 19 of this circular. A form of proxy for the special general meeting is enclosed. Whether or not you are able to attend and vote at the special general meeting, you are requested to complete and return the forms of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the special general meeting. Completion and delivery of a form of proxy will not preclude you from attending and voting in person at the special general meeting or any adjourned meetings should you so desire.

20 February 2004

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Share Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Information on IML . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Reason and intended use of proceed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
IML Share Placing and Share Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Financial Effects of the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Notice of the Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18

• i -

DEFINITIONS

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

• “Announcement”

the joint announcement of ATNT and KT dated 6 February 2004 in relation to, among others, a proposed issue of convertible note by ATNT, application for whitewash waiver by KT, capital reorganization of ATNT, amendment to Bye-laws of ATNT, the IML Share Placing, the Share Subscription, the Share Sale, the Incentive Option Scheme and change of accounting year end date of ATNT

• “associate(s)”

has the meaning ascribed thereto under the Listing Rules

• “ATNT”

Asia Tele-Net and Technology Corporation Limited, a company incorporated in Bermuda, the shares of which are listed on the Stock Exchange

• “ATNT Group”

ATNT and its subsidiaries

• “ATNT Shareholders” holders of the Shares

• “Board” the board of Directors of ATNT

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “IML” Intech Machines Company Limited, the shares of which are listed on the Taiwan Stock Exchange Corporation and a 50.02% owned subsidiary of ATNT

• “IML Capital Reduction” the capital reduction of the issued share capital of IML pursuant to which the number of IML Shares will be reduced from 44,740,000 to 30,660,000

• “IML Shares” shares of NT$7.5 (equivalent to about HK$1.79) each in the capital of IML

• “IML Share Placing” the placing of 13,400,000 new IML Shares by IML at a subscription price of NT$7.5 (equivalent to about HK$1.79) per IML Share

• “IML Share Sale Agreement” the agreement dated 27 January 2004 entered into between ATNT and the Share Purchasers in relation to the sale and purchase of IML Shares

“Incentive Option Scheme” the option scheme to be adopted by ATNT in relation to the granting of call options to certain employees of IML to acquire IML Shares as held by ATNT

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DEFINITIONS

• “KT”

• Karl Thomson Holdings Limited, a company incorporated in Bermuda, the shares of which are listed on the Stock Exchange

• “Latest Practicable Date”

• 20 February 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

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

• “Optimist” Optimist International Limited, a company incorporated in the British Virgin Islands, which is beneficially owned by Mr. Lam Kwok Yan, the chairman and executive director of ATNT, as to 50% and Mr. Lam Kwok Hing, deputy chairman, managing director and executive director of ATNT, as to 50%

• “SFO” The Securities and Futures Ordinance “Share(s)” ordinary share(s) of HK$0.01 each in the capital of ATNT “Share Purchasers” Wise Chance International Limited, a company incorporated in the British Virgin Islands and Money Net Investments Limited, a company incorporated in the British Virgin Islands, which are and whose ultimate beneficial shareholders are independent third parties not connected to ATNT, its directors, chief executive, substantial shareholders and their respective Associates

• “Share Sale” the sale of IML Shares as contemplated under the IML Share Sale Agreement

• “Share Subscription” the subscription of IML Shares by ATNT under the IML Share Placing at an aggregate subscription price of not more than NT$75.0 million (equivalent to about HK$18.0 million)

• “Special General Meeting” the special general meeting of ATNT to be held to consider and approve, among others, the transactions contemplated under the IML Share Sale Agreement

• “Stock Exchange” The Stock Exchange of Hong Kong Limited “HK$” Hong Kong dollar(s), the lawful currency in Hong Kong

For illustrative purpose of this circular, NT$4.2 = HK$1, except where historical financial data was quoted, the exchange rate as at such balance sheet dates were used in accordance with the Statements of Standard Accounting Practice issued by the Hong Kong Society of Accountants.

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LETTER FROM THE BOARD

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Executive Directors: Lam Kwok Yan (Chairman) Lam Kwok Hing (Deputy Chairman & Managing Director)

Non-executive Director:

Registered office: Clarendon House Church Street Hamilton HM11 Bermuda

Kwan Wang Wai, Alan

Head office and

Independent non-executive Directors: Ng Chi Kin, David Cheung Kin Wai

principle place of business: 11 Dai Hei Street Tai Po Industrial Estate Tai Po, New Territories Hong Kong

20 February 2004

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION RELATING TO THE SALE OF SHARES IN IML

INTRODUCTION

It was announced on 6 February 2004 that, among others, on 27 January 2004, ATNT entered into the IML Share Sale Agreement with the Share Purchasers in relation to the sale and purchase of 8.6 million existing IML shares held by ATNT at NT$8.5 (equivalent to about HK$2.024) per IML Share within a two-month period from 27 January 2004. In the Announcement, the Company proposed to hold a special general meeting on 24 March 2004 to approve, if deem fit, the CN Subscription Agreement, the Whitewash Waiver, the Capital Reorganisation, Amendment to Bye-Laws, IML Share Placing, Share Subscription, Share Sale and Incentive Option Scheme. The Company now proposes to move forward the special general meeting to 9 March 2004 to approve, if deem fit, the Share Sale and the circular in respect of the IML Share Sale Agreement will be dispatched on or before 23 February 2004.

The Share Sale constitutes a major transaction for ATNT under Chapter 14 of the Listing Rules and, accordingly, it will be subject to, among others, the approval of the ATNT Shareholders.

The purpose of this circular is to provide the ATNT Shareholders with further information in relation to the Share Sale and to seek their approval on the Share Sale at the special general meeting.

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LETTER FROM THE BOARD

The ATNT Shareholders should note that the Share Sale is only one of the transactions relating to IML as contained in the Announcement. Further details of the other transactions, including the IML Share Placing, the Share Subscription and the Incentive Option Scheme will be set out in another circular. A separate special general meeting will be held and a separate circular will be dispatched as soon as practicable to consider CN Subscription Agreement, the Whitewash Waiver, the Capital Reorganisation, Amendment to Bye-Laws, IML Share Placing, Share Subscription and Incentive Option Scheme.

THE SHARE SALE

On 27 January 2004, ATNT entered into the IML Share Sale Agreement with the Share Purchasers in relation to the sale and purchase of 8.6 million existing IML shares held by ATNT at NT$8.5 (equivalent to about HK$2.024) per IML Share within a two-month period from the date of the IML Share Sale Agreement and could be extended if mutually agreed between the parties.

The terms of the IML Share Sale Agreement were negotiated between the parties on an arm’s length basis. In negotiating the sale price of NT$8.5 (equivalent to about HK$2.024) per IML Share, ATNT has taken into account the following factors:–

• (a) The average closing price per IML Share for the 5, 10 and 15 trading day periods upto and including 27 January 2004, being the date on which the IML Share Sale Agreement was entered, were NT$7.98 (equivalent to about HK$1.9), NT$7.49 (equivalent to about HK$1.78) and NT$7.38 (equivalent to about HK$1.76) per IML Share respectively; and

• (b) The audited consolidated net asset value of approximately NT$7.14 (equivalent to about HK$1.6) per IML Share as at 31 March 2003. The net asset value per IML Shares is calculated based on 44,740,000 IML Shares as of the Latest Practicable Date.

The sale price of NT$8.5 (equivalent to about HK$2.024) per IML Share represents:

• (a) a discount of about 57.7% to the closing price of NT$20.10 (equivalent to about HK$4.79) per IML Share as quoted on the Taiwan Stock Exchange Corporation on the Latest Practicable Date;

• (b) a discount of about 5.6% to the closing price of NT$9.00 (equivalent to about HK$2.143) per IML Share as quoted on the Taiwan Stock Exchange Corporation on 27 January 2004, being the date on which the IML Share Sale Agreement was entered;

• (c) a premium of about 6.52% to the average closing price of approximately NT$7.98 (equivalent to about HK$1.9) per IML Share as quoted on the Taiwan Stock Exchange Corporation over the 5 trading days up to and including 27 January 2004, being the date on which the IML Share Sale Agreement was entered;

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LETTER FROM THE BOARD

• (d) a premium of about 13.48% to the average closing price of approximately NT$7.49 (equivalent to about HK$1.783) per IML Share as quoted on the Taiwan Stock Exchange Corporation over the 10 trading days up to and including 27 January 2004, being the date on which the IML Share Sale Agreement was entered;

• (e) a premium of about 15.18% to the average closing price of approximately NT$7.38 (equivalent to about HK$1.76) per IML Share as quoted on the Taiwan Stock Exchange Corporation over the 15 trading days up to and including 27 January 2004, being the date on which the IML Share Sale Agreement was entered; and

• (f) a premium of about 19.05% to the published audited net asset value of approximately NT$7.14 (equivalent to about HK$1.6) per IML Share as at 31 March 2003. Net asset value per IML Shares is calculated based on 44,740,000 IML Shares as of the Latest Practicable Date.

The total consideration amounts to NT$73,100,000 (equivalent to about HK$17.4 million). The Share Purchasers has delivered to ATNT a deposit in the form of post-dated cheque(s) for a sum of HK$968,000 (equivalent to approximately NT$4.1 million) as performance security upon signing of the IML Share Sale Agreement. The Share Purchasers will settle the consideration of NT$73,100,000 (equivalent to about HK$17.4 million) in cash after relevant approvals have been obtained from the Securities and Futures Commission, Ministry of Finance of Taiwan in respect of the transactions contemplated under the IML Share Sale Agreement; and if the Share Purchasers are in default of the IML Share Sale Agreement, ATNT will be entitled to retain the deposit in the amount of HK$968,000 (equivalent to approximately NT$4.1 million). The directors of ATNT estimate that the times required to obtain the approval from the Securities and Futures Commission, Ministry of Finance of Taiwan is within one month upon obtaining approval from the ATNT Shareholders at the SGM of ATNT.

Conditions Precedent to Completion

The IML Share Sale Agreement is conditional upon the approval of

• (a) the Securities and Futures Commission, Ministry of Finance of Taiwan; and

• (b) the ATNT Shareholders at the SGM of ATNT.

As at the Latest Practicable Date, the parties are in the process of procuring satisfaction of the above conditions precedent but none of them has been fully satisfied.

Completion

Completion will occur on the next business date following the date on which all conditions precedent are fulfilled. Completion is expected to take place on 11 March 2004 by the earliest and, in any event, no later than 26 March 2004 (or such other date as may be agreed by the parties).

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LETTER FROM THE BOARD

INFORMATION ON IML

IML is incorporated in Taiwan with limited liability and the shares of which are listed on the Stock Exchange of Taiwan. IML is a subsidiary of ATNT and are principally engaged in the design, manufacture, and sale of custom built horizontal wet processing equipment and other automation machinery.

The audited consolidated net loss before and after taxation and extraordinary items of IML for the year ended 31 March 2002 were approximately NT$102 million (equivalent to about HK$24.2 million) and NT$105.1 million (equivalent to about HK$24.9 million) respectively. The audited consolidated net loss before and after taxation and extraordinary items of IML for the year ended 31 March 2003 both were NT$68.6 million (equivalent to about HK$15.3 million). The audited net tangible assets value of IML for the year ended 31 March 2002 were approximately NT$388.3 million (equivalent to about HK$92.0 million) or approximately NT$8.68 per IML Share (equivalent to about HK$2.06 per IML Share). The audited net tangible assets value of IML for the year ended 31 March 2003 were approximately NT$319.6 million (equivalent to about HK$71.6 million) or approximately NT$7.14 per IML Share (equivalent to about HK$1.60 per IML Share) based on 44,740,000 IML Shares in issue as of the Latest Practicable Date. The unaudited consolidated net tangible assets value of IML for the six-months ended 30 September 2003 was NT$296.3 million (equivalent to about HK$66.4 million) or about NT$6.62 per IML Share (equivalent to about HK$1.48 per IML Share) based on 44,740,000 IML Shares in issue as of the Latest Practicable Date.

ATNT currently holds approximately 50.02% interest in IML.

REASONS AND INTENDED USE OF PROCEEDS

By entering into the IML Share Sale Agreement, ATNT is able to dispose part of its shareholding in IML in the market at a fair market price. ATNT intends to use the net proceeds of NT$73.1 million (equivalent to about HK$17.4 million) from the Share Sale for the Share Subscription.

In November 2003, IML proposed to carry out the IML Share Placing (details of which are set out in the section headed “IML Share Placing and Share Subscription” below), by issuing new shares in the amount of NT$100.5 million (equivalent to about HK$24 million) subject to the passing of a resolution by the shareholders of IML and the approval by the Securities and Futures Commission, Ministry of Finance of Taiwan. The net proceeds from the issue of new IML Shares will be used principally for working capital of IML. Such resolution was passed in a general meeting of IML held on 19 December 2003. ATNT currently holds approximately 50.02% interest in IML and it is intended that ATNT or its wholly owned subsidiary will subscribe the IML Shares for an aggregate subscription consideration of not more than NT$75.0 million (equivalent to about HK$18.0 million).

The directors of ATNT estimate that the times required to obtain the approval from ATNT Shareholders is within one month upon signing of the IML Share Sale Agreement and the times required to obtain approval from the Securities and Futures Commission, Ministry of Finance of Taiwan is within one month upon obtaining approval from the ATNT Shareholders at the SGM of ATNT. That is why the directors of ATNT have signed up the IML Share Sale Agreement with an expected completion period of 2 months from 27 January 2004.

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LETTER FROM THE BOARD

Reasons for the Share Subscription are set out in the section headed “IML Share Placing and Share Subscription” below. In order to improve the liquidity level in ATNT, ATNT has entered into the IML Share Sale Agreement so that if the Share Sale is completed, the funding requirement for ATNT to subscribe the IML Shares will be financed from the sales proceeds of the Share Sale. Therefore, net proceeds up to about HK$18.0 million from the CN Subscription will be retained in the ATNT Group.

IML SHARE PLACING AND SHARE SUBSCRIPTION

In the special general meeting of IML held on 19 December 2003, the shareholders of IML have approved (a) the IML Capital Reduction whereby the number of IML Shares will be reduced from 44,740,000 to 30,660,000 and (b) a placing of 13,400,000 new IML Shares for an aggregate subscription price of NT$100.5 million (equivalent to about HK$24.0 million) or a subscription price of NT$7.5 (equivalent to about HK$1.79) per IML Share.

The said 13,400,000 IML Shares may be subscribed by ATNT or its subsidiaries, the directors of IML or other associates of IML or other independent third parties which are approved by the Securities and Futures Commission, Ministry of Finance of Taiwan.

The IML Capital Reduction, the IML Share Placing and the subscription price under the IML Share Placing are subject to approval by the Securities and Futures Commission, Ministry of Finance of Taiwan. Such approval request has already been lodged and is pending approval. In the event that the subscription price of NT$7.5 under the IML Share Placing is not approved, the Securities and Futures Commission, Ministry of Finance of Taiwan may require IML’s directors to increase the subscription price under the IML Share Placing.

It is intended that ATNT or its subsidiaries will subscribe IML Shares for not more than 10,000,000 IML Shares for an aggregate subscription price of not more than NT$75.0 million (equivalent to about HK$18.0 million). On the basis that ATNT would subscribe for a maximum of 10,000,000 IML Shares under the IML Share Placing, the remaining 3,400,000 IML Shares would be subscribed by other directors or other Associates of IML or any independent third parties which are approved by the Securities and Futures Commission, Ministry of Finance of Taiwan; and ATNT’s shareholding in IML would increase from about 50.02% of the existing issued share capital of IML to about 57.5% of the enlarged issued share capital of IML upon completion of the issue and allotment of 13,400,000 IML Shares by IML under the IML Share Placing.

As certain directors of IML may subscribe for the IML Shares under the IML Share Placing, the IML Share Placing constitutes a connected transaction for ATNT under the Listing Rules. In addition, if ATNT subscribe less than its proportional shareholding in IML, the IML Share Placing may result in a material dilution of ATNT’s shareholding in IML and therefore constitute a major transaction for ATNT under the Listing Rules.

The IML Share Placing is conditional upon the approval of (a) the ATNT Shareholders; and (b) the Securities and Futures Commission, Ministry of Finance of Taiwan.

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LETTER FROM THE BOARD

The Share Subscription is conditional upon the approval of (a) the ATNT Shareholders; (b) the Investment Commission, Ministry of Economic of Taiwan and (c) the Securities and Futures Commission, Ministry of Finance of Taiwan.

IML, its directors and their respective Associates will abstain from voting in respect of their respective shareholding in ATNT (if any) in relation to the IML Share Placing and the Share Subscription at the SGM of ATNT.

Reasons and benefits

The directors of ATNT consider that the additional investment in IML will bring long-term benefits to the ATNT Group. The business prospect of IML looks good for two reasons. Firstly, IML has successfully broke into the FPD process equipment market in the second quarter of 2003. The IML’s factory was qualified as an approved supplier by a couple of renowned TFT-LCD manufacturers and got orders of over NT$150.0 million (equivalent to about HK$35.71 million) already. In order to compete with the Korean market players, some Japanese TFT-LCD manufacturers have formed alliance with Taiwanese manufacturers. The directors of IML believe that this trend will generate local demands for FPD process equipment and hence benefits IML. Secondly, the entrance into this market means IML has diversified into a market other than PCB. This will help to smooth out the cyclical business effect that PCB industry has brought to ATNT in the past.

The Share Subscription constitutes a discloseable transaction for ATNT under the Listing Rules.

As IML is a non-wholly owned subsidiary of ATNT and the aggregate consideration for the Share Subscription may exceed HK$10.0 million, the Share Subscription constitutes a connected transaction between IML and ATNT pursuant to Rule 14.26 of the Listing Rules and is therefore subject to the Independent ATNT Shareholders’ approval. IML, its directors and their respective Associates will abstain from voting in respect of their respective shareholding in ATNT (if any) in relation to the Share Subscription at the SGM of ATNT.

If the ATNT Shareholders do not approve the Share Subscription, the IML Share Placing may or may not proceed depending on the decision of the board of directors of IML. The IML Share Placing may constitute a material dilution of ATNT’s shareholding in IML if ATNT do not subscribe for the IML Shares and IML would issue new IML Shares under the proposed scheme.

FINANCIAL EFFECTS OF THE TRANSACTION

Upon completion of the IML Share Sale Agreement, IML may cease to be a subsidiary of ATNT as ATNT’s holding will be reduced from 22,377,490 IML Shares (representing about 50.02% of the issued share capital of IML) to 13,777,490 IML Shares (representing about 30.8% of the issued share capital of IML) and its results will cease to be consolidated in the accounts of ATNT immediately following the completion of the transaction.

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LETTER FROM THE BOARD

Upon completion of the IML Share Sale Agreement, IML Capital Reduction, IML Share Placing and Share Subscription, ATNT’s holding will be reduced from about 50.02% to 44.12% of the issued share capital of IML and its results will cease to be consolidated in the accounts of ATNT immediately following the completion of the transaction. Particulars of changes are illustrated below:–

Existing shareholding structure ATNT 22,377,490 Liang Mao Sheng (director of IML) 149,679 Hu Hsin Hwa (director of IML) 845,092 Huang Pin Chun (director of IML) 80,922 Share Purchasers – Public 21,286,817 Total 44,740,000	Upon completion of % the Share Sale 50.02% 13,777,490 0.33% 149,679 1.89% 845,092 0.18% 80,922 0.00% 8,600,000 47.58% 21,286,817 100.00% 44,740,000	Upon completion of the Share Sale and the Capital % Reduction 30.8% 9,441,615 0.33% 102,574 1.89% 579,135 0.18% 55,455 19.22% 5,893,519 47.58% 14,587,702 100.00% 30,660,000	Upon completion of the Share Sale, the Capital Reduction and the Share % Subscription 30.8% 19,441,615 0.33% 102,574 1.89% 579,135 0.18% 55,455 19.22% 5,893,519 47.58% 17,987,702 100.00% 44,060,000	% 44.12% 0.23% 1.31% 0.13% 13.38% 40.83%
				100.00%

The audited consolidated net loss before and after taxation and extraordinary items of ATNT were approximately HK$163.3 million and HK$163.8 million respectively for the financial year ended 31 March 2003. The audited consolidated net loss before and after taxation and extraordinary items of ATNT were approximately HK$145.5 million and HK$144.2 million respectively for the financial year ended 31 March 2002. The impairment loss made for the year ended 31 March 2002 and 2003 were approximately HK$49.8 million and HK$52.5 million respectively.

As at 31 March 2003, the audited consolidated net tangible asset value of ATNT was approximately HK$165.6 million or approximately HK$0.03 per Share based on 5,529,268,000 Shares in issue as of the Latest Practicable Date. As at 30 September 2003, the unaudited consolidated net tangible asset value of ATNT was approximately HK$125.8 million or approximately HK$0.023 per Share based on 5,529,268,000 Shares in issue as of the Latest Practicable Date.

Upon completion of the IML Share Sale, on a pro forma basis, the consolidated net tangible assets of ATNT will be approximately HK$130.44 million. As a consequence of the transaction, ATNT will book a gain on disposal of approximately HK$4.6 million in the financial year ended 31 December 2004. Detailed computation was set out in the Appendix “General Information”.

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LETTER FROM THE BOARD

SPECIAL GENERAL MEETING

Set out in this circular is the Notice convening the special general meeting which will be held at 11:30 a.m. on 9 March 2004 at 11 Dai Hei Street, Tai Po Industrial Estate, New Territories, Hong Kong at which resolutions will be proposed to approve the IML Share Sale Agreement and the transactions contemplated thereunder.

A form of proxy for use at the special general meeting is enclosed with this circular. Whether or not you are able to attend the Special General Meeting in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to ATNT at its principal place of business in Hong Kong at 11 Dai Hei Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong as soon as possible but in any event not less than 48 hours before the appointed time for the special general meeting or any adjournment thereof. Completion of the form of proxy will not preclude you from attending and voting at the special general meeting should you so wish.

The Share Purchasers and their respective associates will abstain from voting in respect of their respective shareholding in ATNT (if any) in relation to the IML Share Sale Agreement and the transactions contemplated thereunder at the special general meeting.

RECOMMENDATIONS

The Board believes the terms of the Share Sale to be fair and reasonable and in the interests of all shareholders of ATNT and recommends the shareholders to vote in favour of the ordinary resolutions to be proposed at the special general meeting for approving the transaction.

ADDITIONAL INFORMATION

Your attentions are drawn to the appendix to this circular setting out general information of ATNT Group.

By order of the Board Lam Kwok Hing

Deputy Chairman & Managing Director

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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 ATNT. 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

a. Interests of Directors

As at the Latest Practicable Date, the interests and short positions of the Directors of ATNT in the Shares, underlying Shares and debentures of ATNT and any of its associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified to ATNT and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests an short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be recorded in the register referred to therein; or (c) were required to be notified to ATNT and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies were as follows:

(i) ATNT

			Number of
	Number of	Shares held	Shares under share
Name of Director	Personal interests	Corporate interests	option scheme
Lam Kwok Yan	69,503,340	1,940,826,660_Note(1)_	114,500,000_Note(2)_
Lam Kwok Hing	69,493,340	1,940,826,660_Note(1)_	114,500,000_Note(2)_

Note:

1. As at the Latest Practicable Date, an aggregate of 1,940,826,660 shares of ATNT were held by Optimist International Limited (“Optimist”) which is beneficially and equally owned by Mr. Lam Kwok Yan and Mr. Lam Kwok Hing.

2. The options were granted on 30 August 2001 under ATNT’s new executive option scheme adopted on 1 January 2001, the options are exercisable at HK$0.053 per Share from 7 September 2001 to 6 September 2004.

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GENERAL INFORMATION

APPENDIX

• (ii) Asia Nice Art Production Limited*

Name of Director

Lam Kwok Yan

Number of ordinary Shares (Personal interests) 1,000

• Asia Nice Art Production Limited is a subsidiary owned as to 60% by ATNT.

Saved as disclosed herein, as at the Latest Practicable Date, none of the Directors had any interest in the share capital of ATNT or any of its associated corporations (within the meaning of Part XV of the SFO).

• b. None of the Directors has any existing or proposed services contract (excluding contracts expiring or terminable by the ATNT Group within one year without payment of compensation other than statutory compensation) with any member of the ATNT Group.

• c. Save as disclosed herein, there is no contract or arrangement subsisting at the date of this circular in which any of the Directors is materially interested and which is significant in relation to the business of the ATNT Group.

• d. None of the Directors has had any direct or indirect interest in any assets which have since 31 March 2003 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the ATNT Group.

3. SUBSTANTIAL SHAREHOLDER’S INTERESTS

As at the Latest Practicable Date, according to the register of interests in shares and short positions kept by ATNT pursuant to section 336 of the SFO and so far as is known to, or can be ascertained after reasonable enquires by the Directors, the following person is directly or indirectly interested in 5% or more of the issued share capital of ATNT:–

	Number of	Percentage of Shares
Name	ordinary shares	or equity interest
Mr. Ngo Cheng Long	500,000,000	9.04%

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GENERAL INFORMATION

APPENDIX

4. INDEBTEDNESS AND CONTINGENT LIABILITIES

Borrowings

At the close of business on 31 December 2003, being the Latest Practicable Date of this indebtedness statement prior to the printing of this circular, the ATNT Group had outstanding borrowings of approximately HK$82.7 million comprising bank loans of approximately HK$81.9 million, bank overdrafts of approximately HK$0.4 million and obligations under finance leases of approximately HK$0.4 million. All outstanding borrowings are not overdue as of the Latest Practicable Date. The total unutilised banking facilities as of 31 December 2003 was HK$87.4 million.

Security for borrowings

Out of the outstanding borrowings of approximately HK$82.7 million, approximately HK$48.5 million of the bank loans were secured by assets of the ATNT Group. At the close of business on 31 December 2003, the ATNT Group’s banking facilities of approximately HK$68.3 million were secured by a legal charge over the ATNT Group’s leasehold land and buildings with a carrying value of approximately HK$123.3 million and bank deposit of approximately HK$3.6 million. The unutilised banking facilities which were secured by assets of the ATNT Group were therefore approximately HK$19.8 million.

General

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities and normal trade debts payable, neither the Company nor any companies comprising the ATNT Group had outstanding at the close of business on 31 December 2003 any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, finance lease and hire purchase commitments, guarantees or other material contingent liabilities.

The Directors confirmed that there had been no material change in the indebtedness and contingent liabilities of the ATNT Group since 31 December 2003.

Foreign currency amounts have been translated into Hong Kong dollars at the approximately exchange rates prevailing at the close of business on 31 December 2003.

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GENERAL INFORMATION

APPENDIX

5. STATEMENT OF PRO FORMA UNAUDITED ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE ATNT GROUP

• (A) The following is a statement of the pro forma unaudited adjusted consolidated net tangible assets of the ATNT Group based on the audited consolidated net tangible assets of the ATNT Group as at 31 March 2003 and the unaudited consolidated net tangible assets of the ATNT Group as at 30 September 2003, adjusted to reflect the effect of Share Sale.

Audited consolidated net asset value of the ATNT Group as at 31 March 2003 Less: Unaudited consolidated net loss of the ATNT Group for the six months ended 30 September 2003 Add: Exchange differences arising from translation of financial statements of overseas subsidiaries not recognised in the income statement Less: Recognition of the deferred tax liabilities in adoption of SSAP12 (Revised) “Income Taxes” Unaudited consolidated net assets of the ATNT Group as at 30 September 2003 Less: Intangible assets of the ATNT Group as at 30 September 2003_(Note 1)_ Unaudited consolidated net tangible asset value of the Group as at 30 September 2003 Add: Net proceeds from Share Sale Less: Net tangible assets disposed attributable to the Share Sale Pro forma unaudited adjusted consolidated net tangible asset value of the ATNT Group immediately after the completion of the Share Sale

HK$’000 167,662 (37,988) 129,674 568 (3,721) 126,521 (714) 125,807 17,405 (12,770) 130,442

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GENERAL INFORMATION

APPENDIX

(B) The following is a statement of the pro forma unaudited adjusted consolidated net tangible assets of the ATNT Group based on the audited consolidated net tangible assets of the ATNT Group as at 31 March 2003 and the unaudited consolidated net tangible assets of the ATNT Group as at 30 September 2003, adjusted to reflect the effect of Share Sale and Share Subscription.

Audited consolidated net asset value of the ATNT Group as at 31 March 2003 Less: Unaudited consolidated net loss of the ATNT Group for the six months ended 30 September 2003 Add: Exchange differences arising from translation of financial statements of overseas subsidiaries not recognised in the income statement Less: Recognition of the deferred tax liabilities in adoption of SSAP12 (Revised) “Income Taxes” Unaudited consolidated net assets of the ATNT Group as at 30 September 2003 Less: Intangible assets of the ATNT Group as at 30 September 2003_(Note 1) Unaudited consolidated net tangible asset value of the ATNT Group as at 30 September 2003 Add: Net proceeds from Share Sale Less: Net tangible assets disposed attributable to the Share Sale Less: Cash consideration to be paid by the ATNT Group for the Share Subscription(Note 2)_ Add: Net tangible assets acquired attributable to the Share Subscription Pro forma unaudited adjusted consolidated net tangible asset value of the ATNT Group immediately after the completion of the Share Sale and Share Subscription

HK$’000 167,662 (37,988) 129,674 568 (3,721) 126,521 (714) 125,807 17,405 (12,770) (17,857) 19,405 131,990

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GENERAL INFORMATION

APPENDIX

Notes:

1. The amount represents goodwill on acquisition of subsidiaries and the patent acquired.

2. The ATNT Group intends to subscribe 10,000,000 IML shares under the IML Share Placing.

3. In calculating the effect on the consolidation net tangible assets of the ATNT Group arising from the Share Sale and Share Subscription, financial figures as of 30 September 2003 are used, the date to which the latest published unaudited financial statements of ATNT were made up.

6. LITIGATION

None of the members of ATNT is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors or ATNT to be pending or threatened by or against any members of the ATNT Group.

7. MATERIAL CONTRACTS

The following are contracts that are material, not being contracts in the ordinary course of business, and that have been entered into by the ATNT Group within the two years immediately preceding the date of this circular:

• (a) On 1 May 2002, the ATNT Group entered into an agreement with the minority shareholders of Sky Citi-Link ATNT (Holdings) Ltd (“SCL”) for the disposal of its 80% interest in the issued ordinary shares of SCL together with the shareholder’s loan due from SCL at the completion of the agreement, the loan was approximately HK$78 million at the date of the agreement, for a consideration of HK$55 million which will be satisfied by certain listed securities. The agreement was terminated on 7 August 2002 as a result of the conditions had not been satisfied.

• (b) On 6 February 2004, ATNT entered into the conditional subscription agreement with Karfun Investments Ltd (“Karfun”), a wholly owned subsidiary of KT, in relation to the issue of the convertible note to Karfun for a consideration of HK$30 million. Particulars of such subscription agreement was disclosed in the joint announcement of ATNT and KT dated 6 February 2004.

8. MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position of ATNT since 31 March 2003, the date to which the latest published audited financial statements of ATNT were made up.

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GENERAL INFORMATION

APPENDIX

9. MISCELLANEOUS

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

• (b) The Secretary of ATNT is Ms. Cheng Yuen Han who is a member of the Hong Kong Institute of Company Secretaries and the Institute of Chartered Secretaries and Administrators in the United Kingdom.

• (c) The registered office of ATNT is at Clarendon House, Church Street, Hamilton HM11, Bermuda. The principal registrars and transfer office of ATNT is Butterfield Corporate Service Limited at Rosebank Centre, 14 Bermudiana Road, Pembroke, Bermuda. The Hong Kong branch registrars and transfer office is Secretaries Limited at G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal office of ATNT at 11 Dai Hei Street, Tai Po Industrial Estates, New Territories, Hong Kong during normal business hours on any day (except public holidays) for a period of 14 days from the date of this circular up to and including the date of the SGM:

• (a) the memorandum of association and bye-laws of ATNT;

• (b) the IML Share Sale Agreement;

• (c) the announcement dated 6 February 2004;

• (d) the audited consolidated accounts of the ATNT Group for the two financial years ended 31 March 2002 and 2003;

• (e) the unaudited interim report of the ATNT Group for the six months ended 30 September 2003;

• (f) the audited accounts of IML for the two financial years ended 31 December 2001 and 2002; and

• (g) the material contracts referred to in the section headed “Material Contracts” in this Appendix.

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NOTICE OF THE SPECIAL GENERAL MEETING

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NOTICE IS HEREBY GIVEN THAT a special general meeting of Asia Tele-Net and Technology Corporation Limited (the “Company”) will be held at 11 Dai Hei Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong on Tuesday, 9 March 2004 at 11:30 a.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolution as ordinary resolution:

ORDINARY RESOLUTION

“ THAT

• (a) the agreements dated 27 January 2004 (the “IML Share Sale Agreement”) entered into between the Company and each of the Wise Chance International Limited and Money Net Investments Limited (the “Share Purchasers”) (copies of which marked “A” and “B” respectively have been tabled at the meeting and initialed by the Chairman of the meeting for the purpose of identification) pursuant to which the Company has agreed to sell and the Share Purchasers have agreed to purchase 8.6 million existing IML Shares for an aggregate consideration amount of NT$73,100,000 (approximately HK$17.4 million) within the two month period be and is hereby approved, ratified and confirmed; and

• (b) the directors of the Company be and are hereby authorized on behalf of the Company (a) to sign, seal, execute perfect and deliver all such document and do all such deeds, acts, matters and things as they may in their discretion consider necessary or desirable for the purpose of or in connected with the implementation of the Agreement; (b) to exercise or enforce all of the Company’s rights under the Agreement and (c) to complete the Agreement in accordance with its terms.”

By Order of the Board

Lam Kwok Hing

Deputy Chairman & Managing Director

Hong Kong, 20 February 2004

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NOTICE OF THE SPECIAL GENERAL MEETING

Principal office in Hong Kong:–

11 Dai Hei Street,

Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong

Notes:–

1. Any member entitled to attend and vote at the meeting shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a member of the Company.

2. The form of proxy must be lodged at the head office and principal place of business of the Company in Hong Kong not less than 48 hours before the time appointed for the meeting. Completion and return of the proxy will not preclude a member from attending and voting in person.

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