DIT Group Limited — Proxy Solicitation & Information Statement 2011

Mar 31, 2011

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take 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.

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 stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in South East Group Limited, you should at once hand this circular and the enclosed form of proxy to the purchaser or transferee or to the bank, stockbroker, or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

This circular is for information only and does not constitute an invitation or other to acquire, purchase or subscribe for securities.

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(Incorporated in Bermuda with limited liability) (Stock Code: 726)

PROPOSED AMENDMENT OF TERMS AND CONDITIONS OF HK$68,000,000 CONVERTIBLE BOND DUE 2011

A letter from the Board of South East Group Limited is set out on pages 3 to 7 of this circular. A notice convening the special general meeting of South East Group Limited (the “Company”) to be held at 8A-B, Entertainment Building, 30 Queen’s Road Central, Hong Kong on Monday, 18 April 2011 at 10:00 a.m. (the “SGM”) is appended to this circular.

A form of proxy is also enclosed. Whether or not you are able to attend the SGM in person, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company at its principal place of business at 8A-B, Entertainment Building, 30 Queen’s Road Central, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the SGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from subsequently attending and voting in person at the SGM or at any adjourned meeting should you so wish.

31 March 2011

* For identification purposes only

CONTENTS

	Page
Definitions......................................................................................................................................	1
Letter from the Board..................................................................................................................	3
Notice of SGM...............................................................................................................................	8

– i –

DEFINITIONS

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

• “Amendment”

• The amendment of the terms and conditions of the Convertible Bond

• “Announcement”

• The announcement of the Company dated 9 March 2011 in relation to the entry of the Deed of Amendment

• “Board”

• Board of Directors of the Company

• “Bondholder”

• any person whose name is for the time being registered in the register of Bondholder and any person entitled by transmission to be registered as such

• “Company”

• South East Group Limited (stock code: 726), a company incorporated in Bermuda with limited liability, whose shares are listed on the Stock Exchange

• “Conversion Shares”

• the Shares to be issued by the Company upon exercise by the Bondholder of the conversion rights attaching to the Convertible Bond as amended by the Deed of Amendment

• “Convertible Bond”

• the convertible bond in the principal amount of Hong Kong dollars sixty eight million (HK$68,000,000), issued by the Company and subscribed by the Subscriber carrying an interest of two and half per cent. (2.5%) per annum.

• “Deed of Amendment”

• The deed of amendment dated 9 March 2011 entered into between the Company and the Subscriber

• “Directors”

The directors of the Company

• “CB Announcement”

The Company’s announcement dated 14 April 2008 in relation to the issue of the Convertible Bond and resumption of trading

• “Group”

The Company and its subsidiaries

• “Hong Kong”

The Hong Kong Special Administrative Region of the PRC

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Latest Practicable Date”

• 30 March 2011, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in the circular

– 1 –

DEFINITIONS

“Listing Committee”	The Listing Committee of the Stock Exchange
“Listing Rules”	The Rules Governing the Listing of Securities on the Stock
	Exchange
“Maturity Date”	7 May 2016
“Outstanding Principal Amount”	the principal amount of HK$68,000,000 less any amount that
	has been repaid by the Company or converted into Shares from
	time to time before the Maturity Date
“SGM”	The special general meeting of the Company to be convened
	and held for the Shareholders to consider, and if thought fit,
	approve, among others, the Amendment
“Share(s)”	Ordinary share(s) of HK$0.10 each in the share capital of the
	Company
“Shareholder(s)”	Holder(s) of Share(s)
“Specific Mandate”	The specific mandate to be given to the Directors to issue the
	Conversion Shares to be sought at the SGM in relation to the
	Convertible Bond
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscriber”	Loyal Delight Group Limited, a company incorporated in the
	British Virgin Islands and whose registered office is situated at
	Portcullis TrustNet Chambers, P.O. Box 3444, Road Town,
	British Virgin Islands, which is an independent third party

– 2 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability) (Stock Code: 726)

Executive Directors: WU Siu Chung (Chairman) CHEN Xiaoping

Non-Executive Directors: CHEN Yuan Shou, Budiman Eduard William Rudolf Helmuth WILL

Independent Non-Executive Directors: LO Yuk Lam WONG Kam Wah David R. PETERSON

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

Principal place of business in Hong Kong: 8A-B, Entertainment Building, 30 Queen’s Road Central, Hong Kong

31 March 2011

To the Shareholders

Dear Sir or Madam,

PROPOSED AMENDMENT OF TERMS AND CONDITIONS OF HK$68,000,000 CONVERTIBLE BOND DUE 2011

1. INTRODUCTION

Reference is made to the Company’s announcement on 9 March 2011 and the CB Announcement. As described in the CB Announcement, the Company issued the Convertible Bond to the Subscriber, an independent third party, with a principal amount of HK$68,000,000. The Convertible Bond bears interest at the rate of 2.5% per annum and is convertible into Shares of the Company. The Stock Exchange has granted its approval on 25 April 2008 for the listing of, and permission to deal in 66,019,417 Conversion Shares, being the Conversion Shares to be issued upon full conversion of the Convertible Bond at the conversion price of HK$1.03 per Share which will be superseded if listing approval is granted by the Stock Exchange for Shares to be issued upon conversion of the Convertible Bond (as amended) and subject to the approval of the Specific Mandate by Sharerholders. As at the Latest Practicable Date, the Convertible Bond with an aggregate amount of HK$68,000,000 held by the Subscriber was still outstanding. In addition, the Bondholder as registered in the Company’s register of Bondholder is not connected persons of the Company as at the Latest Practicable Date. All the outstanding Convertible Bond will mature on 7 May 2011 pursuant to the original terms and conditions of the Convertible Bond. For further details of the Convertible Bond, please refer to the CB Announcement.

* For identification purposes only

– 3 –

LETTER FROM THE BOARD

The purposes of this circular is to provide you with, among other things, (i) information in relation to the Amendment and (ii) a notice of the SGM to consider and, if thought fit, to approve the resolution in relation to the Amendment.

2. DEED OF AMENDMENT

On 9 March 2011, the Company and the Subscriber entered into the Deed of Amendment to amend certain terms of the Convertible Bond. After the Amendment, the maturity date of the Convertible Bond will be extended for 5 years to 7 May 2016. In addition, the Conversion Price of the Convertible Bond will be adjusted to HK$0.418 per Conversion Share and the interest of the Convertible Bond will be adjusted to 3 per cent (3%) per annum, effective from 8 May 2011. Furthermore, any Outstanding Principal Amount cannot be converted if following such conversion, the Bondholder and its associates would be interested in an aggregate of 20% or more of the issued share capital of the Company then issued immediately before the conversion.

The principal terms and conditions of the Convertible Bond after the Deed of Amendment becomes effective are as follows:

Principal amount	:	HK$68,000,000.
Interest	:	3% per annum effective from 8 May 2011 on the
		Outstanding Principal Amount of the Convertible Bond.
		Interest will be payable annually in arrears.
Conversion Price	:	HK$0.418 per Conversion Share
Maturity Date	:	7 May 2016
Status	:	The Convertible Bond constitutes general, unsecured
		obligations of the Company and will rank pari passu with
		all future unsecured and unsubordinated obligations of
		the Company. No application will be made for a listing
		of the Convertible Bond in any jurisdiction.
Transferability	:	The Convertible Bond may be assigned or transferred in
		respect of the whole Outstanding Principal Amount in
		accordance with the provisions of the Convertible Bond,
		subject to the written consent of the Company and subject
		to the satisfaction or compliance with the conditions,
		approvals, requirements and any other provisions of or
		under (1) the Stock Exchange (and any alternative stock
		exchange) or their rules and regulations; (2) the approval
		for listing in respect of the Conversion Shares; and
		(3) all applicable laws and regulations.

– 4 –

LETTER FROM THE BOARD

Any assignee or transferee of the Convertible Bond may not assign or transfer the Convertible Bond without the written consent of the Company. The Company may at its discretion determine that the Convertible Bond may not be assigned or transferred if the Company considers that:

• (a) the assignee or the transferee or any of its associates or controller directly or indirectly compete with any businesses of the Company; or

• (b) the assignee or the transferee or any of its associates is or was in dispute or legal proceedings with the Company, any of its shareholders holding 5% or more of the Company issued share capital and/or any of its directors; or

• (c) the assignee or the transferee, its legal owner or its ultimate beneficial owner is not independent of or is connected with any one or more of the directors, chief executives and substantial shareholders of the Company and its subsidiaries and their respective associates (as defined under the Listing Rules).

• Conversion Right : The Bondholder may convert all or any part of the Outstanding Principal Amount of the Convertible Bond into Shares in accordance with the terms and conditions of the Convertible Bond, provided that (i) the number of Shares in respect of each conversion shall not be less than 10 million Shares; (ii) exercise of the Conversion Right shall be restricted to the extent that the minimum public float as required by the Stock Exchange can be maintained or that (iii) any Outstanding Principal Amount can not be converted if following such conversion, the Bondholder and its associates would be interested in an aggregate of 20% or more of the issued share capital of the Company then issued immediately before the conversion.

Ranking of Conversion Shares : The Conversion Shares will, upon issued, rank pari passu in all respects with the Shares then in issue.

Voting : The Bondholder will not be entitled to receive notices of, attend or vote at any meetings of the Company by reason only of being the Bondholder.

– 5 –

LETTER FROM THE BOARD

Redemption : The Company has no obligation to redeem the Convertible Bond prior to the Maturity Date unless an event of default as provided in the terms and conditions of the Convertible Bond has occurred prior to the Maturity Date and the Bondholder serves a notice on the Company requiring the Convertible Bond to be redeemed. The Company may, at any time, prepay without penalty, the Outstanding Principal Amount of the Convertible Bond in integral amounts of HK$1,000,000.

3. CONDITIONS OF THE DEED OF AMENDMENT

The Deed of Amendment will only be effective upon all the following conditions having been fulfilled:

• (a) the Company having convened a special general meeting at which resolutions shall be duly passed by the Shareholders to approve and ratify the Deed of Amendment and the transactions contemplated thereunder;

• (b) the Stock Exchange having approved the Amendment pursuant to the Listing Rules and the Listing Committee having granted (either unconditionally or subject to conditions acceptable to the Company) the listing of, and permission to deal in, the Conversion Shares to be issued as a result of the exercise of the Conversion Rights attaching to the Convertible Bond as amended by the Deed of Amendment; and

• (c) all necessary consents and approvals required to be obtained on the part of the Company in respect of the Amendment having been obtained.

4. LISTING OF THE CONVERTIBLE BOND AND THE CONVERSION SHARES

No application will be made for the listing of the Convertible Bond on the Stock Exchange or any other recognized stock or securities exchanges. However, application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares to be issued as a result of the exercise of the conversion rights attaching to the Convertible Bond in full pursuant to the Deed of Amendment.

5. REASONS FOR THE AMENDMENT

The Amendment effectively allows the Group to refinance the debts under the Convertible Bond with only small increase of the interest for further 5 years and the Board is of the view that the Amendment will enable the Company to retain the funds for potential investments or opportunities. The Board considers that the terms and conditions of the Deed of Amendment are fair and reasonable and the Amendment is in the interests of the Company and the Shareholders as a whole. The Directors are of the view that the Amendment will not pose any significant impact on the operations of the Group.

– 6 –

LETTER FROM THE BOARD

6. SPECIFIC MANDATE

The Conversion Shares falling to be allotted and issued upon exercise of the conversion rights attached to the Convertible Bond (pursuant to the terms as altered by the Deed Amendment) will be issued under the Specific Mandate to be sought at the SGM. The Specific Mandate is conditional upon the passing of the relevant resolution by the shareholders at the SGM and no party is required to abstain form voting at the SGM.

7. RECOMMENDATION

The Directors consider that the terms of the Amendment are on normal commercial terms, fair and reasonable and in the interests of the Shareholders and the Company as a whole.

By order of the Board SOUTH EAST GROUP LIMITED Wu Siu Chung Chairman

– 7 –

NOTICE OF SGM

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(Incorporated in Bermuda with limited liability) (Stock Code: 726)

NOTICE IS HEREBY GIVEN THAT a special general meeting (the “SGM”) of South East Group Limited (the “Company”) will be held at 8A-B, Entertainment Building, 30 Queen’s Road Central, Hong Kong on Monday, 18 April 2011 at 10:00 a.m. for the purpose of considering and, if thought fit, passing with or without amendment, the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :

• (a) the entry into of the Deed of Amendment (as defined in the circular to the shareholders of the Company dated 31 March 2011), a copy of which has been produced to this meeting marked “A” and signed by the chairman of this meeting for identification purpose, the transactions contemplated thereunder and the execution of the Deed of Amendment and any documents and agreements incidental thereto under the common seal of the Company by any two directors of the Company on behalf of the Company be and are hereby confirmed, approved, authorised and ratified in all respect;

• (b) any one director of the Company or, if the affixation of the common seal of the Company is necessary, any two directors of the Company be and is/are hereby authorised for and on behalf of the Company to execute (and, if necessary, affix the common seal of the Company to) any such other documents, instruments and agreements and to do any such acts or things as may be deemed by him/her/them in his/her/their absolute discretion to be necessary or incidental to, ancillary to or in connection with the matters contemplated in the Deed of Amendment and the transactions contemplated thereunder or otherwise in relation to the Deed of Amendment and the matters and the transactions contemplated thereunder;

• (c) the issue of up to 162,679,425 shares of HK$0.10 each (the “ Conversion Shares ”) in the share capital of the Company upon exercise of the conversion rights attaching to the convertible bond due 2016 (the “ Convertible Bond ”) up to an principal amount of HK$68,000,000 be and is hereby approved and the Directors be and are hereby authorized to allot and issue the Conversion Shares pursuant to and in accordance with the instrument executed by the Company constituting the Convertible Bond; and

* For identification purposes only

– 8 –

NOTICE OF SGM

• (d) the Directors be and are hereby authorised to do all such acts and things as they consider necessary or expedient in connection with the issue of the Conversion Shares upon exercise of the conversion rights attaching to the Convertible Bond.”

By order of the Board SOUTH EAST GROUP LIMITED Wu Siu Chung Chairman

Hong Kong, 31 March 2011

Notes:

• (i) A member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint a proxy to attend and, in the event of a poll, vote in his stead. A proxy need not be a member of the Company.

• (ii) In order to be valid, the form of proxy together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of the power of attorney or authority must be deposited with the Company at its principal place of business at 8A-B, Entertainment Building, 30 Queen’s Road Central, Hong Kong not less than 48 hours before the time for holding the meeting or adjourned meeting.

• (iii) Completion and return of the form of proxy will not preclude a member of the Company from attending and voting in person at the meeting convened or any adjournment thereof and in such event, the authority of the proxy shall be deemed to be revoked.

The directors of the Company as at the date of this notice are Mr. Wu Siu Chung (Chairman) and Mr. Chen Xiaoping as executive directors, Mr. Chen Yuan Shou, Budiman and Mr. Eduard William Rudolf Helmuth Will as non-executive directors and Mr. Lo Yuk Lam, Mr. Wong Kam Wah and Mr. David R. Peterson as independent non-executive directors.

– 9 –