Dragon Mining Limited — Proxy Solicitation & Information Statement 2006

Feb 27, 2006

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 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 Samson Paper Holdings Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

==> picture [82 x 58] intentionally omitted <==

SAMSON PAPER HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 731)

DISCLOSEABLE TRANSACTION FOR THE ESTABLISHMENT OF A JOINT VENTURE IN MALAYSIA AND CONTINUING CONNECTED TRANSACTIONS

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the board of directors of Samson Paper Holdings Limited is set out on pages 4 to 15 of this circular and a letter from the Independent Board Committee (as defined herein) is set out on page 16 of this circular. A letter from the Independent Financial Adviser (as defined herein) containing its advice to the Independent Board Committee and the independent Shareholders is set out on pages 17 to 23 of this circular.

28 February 2006

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2.	Discloseable Transaction for the establishment of a joint venture
	in Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
	The Shareholders’ Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
3.	Continuing Connected Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
	The Master Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
4.	Reasons for and Benefits of the Discloseable Transaction and
	the Continuing Connected Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . .	13
5.	Listing Rules Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
6.	General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
7.	Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . .		16
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . .		17
Appendix	– General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

– i –

DEFINITIONS

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

• “Announcement”

the announcement of the Company dated 6 February 2006 relating to the discloseable transaction for the establishment of a joint venture in Malaysia and the Continuing Connected Transactions

• “associates”

• has the meaning ascribed to it under the Listing Rules

• “Board” the board of Directors

• “Company”

Samson Paper Holdings Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange

• “Continuing Connected Transactions”

the Master Agreement and the transactions contemplated thereunder

• “Director(s)”

• director(s) of the Company

• “Group”

the Company and its subsidiaries

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “HK$” or “HK dollars”

• Hong Kong dollars, the lawful currency of Hong Kong

• “Independent Financial Adviser”

• Tai Fook Capital Limited, a corporation licensed to carry out type 6 (advising on corporate finance) regulated activity under the SFO and the independent financial adviser appointed to advise the Independent Board Committee and the independent Shareholders on the Continuing Connected Transactions

• “Independent Board Committee”

an independent committee of the Board comprising Mr. Pang Wing Kin, Patrick, Mr. Tong Yat Chong and Mr. Ng Hung Sui, Kenneth

• “Latest Practicable Date”

23 February 2006, 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

– 1 –

DEFINITIONS

“Master Agreement” the Master Agreement dated 24 January 2006 for the purchase of paper and paper board products by Shun Hing and Samson Paper JV from United Paper Malaysia and/or United Paper Singapore

• “PRC” the People’s Republic of China

• “RM” Ringit, the lawful currency of Malaysia

• “RMB” Renminbi, the lawful currency of the PRC

• “Samson Paper JV” Samson Paper (M) Sdn. Bhd., a company incorporated under the laws of Malaysia which is owned as to 70% by Top Pegasus and 30% by United Paper Singapore

• “Samson Paper JV Board” the board of directors of Samson Paper JV

• “SFO”

• Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Shareholder(s)” the holder(s) of Share(s)

• “Shares” shares of HK$0.10 each in the capital of the Company

• “Shareholders’ Agreement” the shareholders’ agreement entered into between Top Pegasus and United Paper Singapore on 24 January 2006 in relation to the establishment of Samson Paper JV

• “Shun Hing”

Shun Hing Paper Company Limited, a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

• “Stock Exchange”

• The Stock Exchange of Hong Kong Limited

• “substantial shareholder”

• has the meaning ascribed to it under the Listing Rules

• “Top Pegasus”

Top Pegasus Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company

• “United Paper Malaysia”

United Paper Board (M) Sdn. Bhd., a company incorporated under the laws of Malaysia and a subsidiary of United Pulp & Paper

• “United Paper Singapore”

United Paper Industries Pte Limited, a company incorporated under the laws of Singapore and a wholly-owned subsidiary of United Pulp & Paper

– 2 –

DEFINITIONS

“United Pulp & Paper” United Pulp & Paper Company Limited, a company incorporated under the laws of Singapore, the shares of which are listed on the Singapore Exchange Limited “%” per cent.

For the purpose of this circular, the exchange rates at HK$1.00 = RMB1.04 and RM1.00 = HK$2.08 have been used for purpose of illustration only and does not constitute a representation that any amount has been, could have been or may be exchanged at any particular rate on the date or dates in question or any other date.

– 3 –

LETTER FROM THE BOARD

==> picture [82 x 59] intentionally omitted <==

SAMSON PAPER HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 731)

Executive Directors: Sham Kit Ying (alias Sham Kit) (Chairman) Lee Seng Jin (Deputy Chairman) Chow Wing Yuen Sham Yee Lan, Peggy Lee Yue Kong, Albert

Non-executive Director: Lau Wang Yip, Eric

Independent Non-executive Directors: Pang Wing Kin, Patrick Tong Yat Chong Ng Hung Sui, Kenneth

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

Head office and principal place of business in Hong Kong: 3rd Floor Seapower Industrial Centre 177 Hoi Bun Road Kwun Tong Kowloon Hong Kong 28 February 2006

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION FOR THE ESTABLISHMENT OF A JOINT VENTURE IN MALAYSIA AND CONTINUING CONNECTED TRANSACTIONS

1. INTRODUCTION

On 6 February 2006, the Directors announced that:

• (a) Top Pegasus, a wholly-owned subsidiary of the Company, entered into the Shareholders’ Agreement with United Paper Singapore and Samson Paper JV on 24 January 2006 for the establishment of Samson Paper JV as a joint venture to operate a manufacturing plant in Kuala Selangor, Malaysia for the cutting and laminating paper and paper board and to manufacture, distribute and sell paper and paper board; and

– 4 –

LETTER FROM THE BOARD

• (b) Shun Hing, a wholly-owned subsidiary of the Company, and Samson Paper JV entered into the Master Agreement with United Paper Malaysia and United Paper Singapore on 24 January 2006 for the purchase of paper and paper board products by Shun Hing and Samson Paper JV from United Paper Malaysia and United Paper Singapore.

Samson Paper JV has an issued share capital of RM2,250,000 (approximately HK$4,680,000) which is owned by Top Pegasus as to 70% and by United Paper Singapore as to 30%. Top Pegasus and United Paper Singapore will provide shareholder’s loans to Samson Paper JV in the amounts of RM4,085,135 (approximately HK$8,497,081) and RM1,750,772 (approximately HK$3,641,606) respectively, in proportion to their respective shareholding percentage in Samson Paper JV. Samson Paper JV is expected to obtain banking facilities in an aggregate amount of up to RM18,100,000 (approximately HK$37,648,000) which according to the terms of the Shareholders’ Agreement will be guaranteed by Top Pegasus and United Paper Singapore in proportion to their respective shareholding percentage in Samson Paper JV.

As the applicable percentage ratios for the total capital commitment (in the form of share capital and shareholder’s loan) by Top Pegasus to Samson Paper JV and the amount of the corporate guarantees to be provided by Top Pegasus for the banking facilities to be obtained by Samson Paper JV in aggregate exceeds 5% but is less than 25%, the transaction for the establishment of Samson Paper JV constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

As a result of the establishment of Samson Paper JV, the Company holds a 70% shareholding interest in Samson Paper JV through Top Pegasus and thus Samson Paper JV is an indirectly owned subsidiary of the Company. By virtue of its 30% shareholding interest in Samson Paper JV, United Paper Singapore has become a substantial shareholder of a subsidiary of the Company and thus a connected person of the Company. As United Paper Malaysia is an associate of United Paper Singapore, it is also a connected person of the Company.

As the applicable percentage ratios for transactions under the Master Agreement on an annual basis exceed 2.5%, the transactions under the Master Agreement constitute non-exempt continuing connected transactions of the Company under Rule 14A.35 of the Listing Rules, and are subject to the disclosure requirements under Rules 14A.45 to 14A.47 of the Listing Rules and the approval of independent Shareholders under Rule 14A.48 of the Listing Rules. Pursuant to Rule 14A.43 of the Listing Rules, the Stock Exchange has granted the Company a waiver from the requirement to hold a general meeting of the Shareholders and permission for the independent Shareholders’ approval of the transactions under the Master Agreement and the annual caps relating thereto to be given in writing.

The Board appointed the Independent Board Committee to consider and advise the independent Shareholders on the terms of the Master Agreement and the annual caps relating thereto, and the Independent Financial Adviser to advise the Independent Board Committee and the independent Shareholders on whether the terms of the Master Agreement and the annual caps relating thereto are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

– 5 –

LETTER FROM THE BOARD

The purpose of this circular is (i) to provide the Shareholders with further details on the establishment of Samson Paper JV and the Master Agreement, (ii) to set out the letter from the Independent Board Committee and the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the independent Shareholders on the terms of the Master Agreement and the annual caps relating thereto, and (iii) to give other information on the Company as required by the Listing Rules.

2. DISCLOSEABLE TRANSACTION FOR THE ESTABLISHMENT OF A JOINT VENTURE IN MALAYSIA

Samson Paper JV was incorporated under the laws of Malaysia on 17 February 2005 with an authorised share capital of RM5,000,000 (approximately HK$10,400,000) divided into 5,000,000 shares and two issued shares each held by a nominee shareholder which is an independent third party not connected with the directors, chief executive and substantial shareholders of the Group or any of their respective associates. On 5 December 2005, each of these nominee shareholders transferred its one share in Samson Paper JV to Top Pegasus and United Paper Singapore respectively in consideration of the sum of RM1.00 (approximately HK$2.08), and Samson Paper JV allotted and issued for cash at par value 1,574,999 shares to Top Pegasus and 674,999 shares to United Paper Singapore. Prior to the establishment of Samson Paper JV, Samson Paper JV did not carry on any business activities. The purpose of incorporating Samson Paper JV in February 2005 was to take up the company name in Malaysia to avoid such name being registered by others.

On 24 January 2006, Top Pegasus entered into the Shareholders’ Agreement with United Paper Singapore and Samson Paper JV for the establishment of Samson Paper JV as a joint venture to operate a manufacturing plant in Kuala Selangor, Malaysia for cutting and laminating paper and paper board and to manufacture, distribute and sell paper and paper board which constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

THE SHAREHOLDERS’ AGREEEMENT

Date

24 January 2006

The Parties

• (a) United Paper Singapore;

• (b) Top Pegasus; and

• (c) Samson Paper JV

The Company is beneficially interested in approximately 19.06% of the total issued share capital of United Pulp & Paper, the holding company of United Paper Singapore, and has nominated three out of a total of six directors to the board of United Pulp & Paper. Save as disclosed above, to the best of the Directors’ knowledge,

– 6 –

LETTER FROM THE BOARD

information and belief having made all reasonable enquiry, prior to the establishment of Samson Paper JV, United Paper Singapore and its ultimate beneficial owner were third parties independent of the Company and not connected with the directors, chief executive and substantial shareholders of the Group or any of their respective associates.

Shareholding Structure

Samson Paper JV has an issued and paid up share capital of RM2,250,000 (approximately HK$4,680,000) comprising of 2,250,000 shares of RM1.00 (HK$2.08) each which are held by United Paper Singapore and Top Pegasus as follows:

	Number of shares held in	Percentage
	Samson Paper JV	shareholding
United Paper Singapore	RM675,000	30%
	(approximately HK$1,404,000)
Top Pegasus	RM1,575,000	70%
	(approximately HK$3,276,000)

The acquisition of share capital in Samson Paper JV by each of United Paper Singapore and Top Pegasus was financed through internal cash resources of United Paper Singapore and Top Pegasus respectively.

Business of Samson Paper JV

Pursuant to the Shareholders’ Agreement, the business of Samson Paper JV includes (a) operating a manufacturing plant (for the purposes of cutting and laminating) in Kuala Selangor, Malaysia; (b) importing, exporting, producing, manufacturing, distributing and selling all types of paper and paperboard (inclusive of products manufactured by United Paper Malaysia); and (c) any other such businesses and/or activities as United Paper Singapore and Top Pegasus may agree to in writing from time to time.

Composition of the Samson Paper JV Board

Top Pegasus shall be entitled to appoint 3 directors and United Paper Singapore shall be entitled to appoint 1 director. The chairman of the Samson Paper JV Board shall be appointed by Top Pegasus.

In the event of a change to the respective shareholding proportion of Top Pegasus and United Paper Singapore in Samson Paper JV, the composition of directors appointed by each of them to the Samson Paper JV Board shall be in proportion to the respective percentage interest of each of them in Samson Paper JV as nearly as possible.

– 7 –

LETTER FROM THE BOARD

Licenses and Approvals

Top Pegasus and United Paper Singapore shall use their best endeavours to procure and ensure that all licences, consents, approvals or authorisations (if necessary) from any relevant authorities in Malaysia or elsewhere (including but not limited to any governmental or regulatory authorities) for the conduct of the business of Samson Paper JV be obtained and continue to be in force.

Samson Paper JV has obtained a business licence and a manufacturing licence from relevant authorities in Malaysia for the conduct of its current business.

Financing

Samson Paper JV shall obtain loans, facilities or other financing from such banks or financial institutions on such terms and subject to such conditions as may be approved by the Samson Paper JV Board to meet its funding requirement within the limit set out in the budget approved by the Samson Paper JV Board. If Samson Paper JV is unable to obtain any or sufficient financing from banks or financial institutions, the shareholders of Samson Paper JV shall provide the amount required by way of shareholders’ loans or by subscribing in cash for debentures or further shares in Samson Paper JV.

The repayment and/or any other obligations of Samson Paper JV under any financing obtained by Samson Paper JV from banks or other financial institutions shall be (if required by banks or other financial institutions) guaranteed by its shareholders and/or indemnity or other security being provided by its shareholders in proportion to their respective shareholding percentage in Samson Paper JV.

If any shareholder of Samson Paper JV fails to provide its pro-rata portion of the aforesaid share or loan capital, guarantee, indemnity or security (as the case may be), the other shareholder of Samson Paper JV may elect (but shall not be obliged) to provide such portion of support to Samson Paper JV, and the amount of such portion of support (other than in the form of subscription for shares or debentures of Samson Paper JV) shall be treated as an interest bearing loan due from the defaulting shareholder to the providing shareholder. Such loan shall be unsecured and shall bear interest at the rate per annum equal to the aggregate sum of (i) the cost of fund of the providing shareholder in funding and financing the relevant amount of the non-provided shareholder support from whatever source the providing shareholder may reasonably select and (ii) interest at the rate of 2 per cent. per annum (on the basis of a 365-day year) compounded on a monthly basis from the date of provision of the non-provided shareholder support until such sum is fully repaid to the providing shareholder.

Samson Paper JV is expected to obtain banking facilities in an aggregate amount of up to RM18,100,000 (approximately HK$37,648,000). Top Pegasus and United Paper Singapore will provide corporate guarantees separately on a several basis in proportion to their respective shareholding percentage in Samson Paper JV up to the

– 8 –

LETTER FROM THE BOARD

aggregate amount of RM12,670,000 (approximately HK$26,353,600)) and RM5,430,000 (approximately HK$11,294,400) respectively in respect of such banking facilities in accordance with the terms of the Shareholders’ Agreement.

Top Pegasus and United Paper Singapore will separately provide shareholder’s loans to Samson Paper JV in the amounts of RM4,085,135 (approximately HK$8,497,081) and RM1,750,772 (approximately HK$3,641,606) respectively. Such shareholders’ loans shall be non-interest bearing and repayable on demand and are in proportion to their respective percentage shareholding in Samson Paper JV. These shareholder’s loans will be due from Samson Paper JV to Top Pegasus and United Paper Singapore respectively for the corresponding amount provided.

Transfer of Shares

If any shareholder of Samson Paper JV wishes to sell, transfer or dispose of all or any part of its shares in Samson Paper JV or any interest therein, such shareholder shall first offer to sell to the other shareholders of Samson Paper JV in proportion to their respective shareholding in Samson Paper JV its shares and a pro-rata portion of the shareholder’s loan owed to it (if any). Any shares and shareholder’s loan offered but not acquired by the other shareholders of Samson Paper JV may be sold to a third party independent of the offering shareholder and approved by the other shareholders on terms no more favourable than those offered to other shareholders of Samson Paper JV.

United Paper Singapore shall not sell, transfer or otherwise dispose of all or any part of its shares in Samson Paper JV or any interest therein or any of its rights and interest in any shareholders’ loan owing to it by Samson Paper JV within a period of three (3) years from the date of the Shareholders’ Agreement.

Information Rights

The shareholders of Samson Paper JV shall be provided the accounts and financial statements, budget, business plan, report and such other information concerned with and arising out of the business of Samson Paper JV as they may reasonably require.

Dividends

Top Pegasus and United Paper Singapore agree that dividends shall, if and when declared by the Samson Paper JV Board, be payable annually or such other intervals as the Samson Paper JV Board may determine.

Taking Effect of the Shareholders’ Agreement

The entering into of the Shareholders’ Agreement by Top Pegasus shall be subject to the compliance by the Company of all applicable requirements under Chapter 14 of the Listing Rules on or before 31 March 2006. If such condition is not fulfilled by 31

– 9 –

LETTER FROM THE BOARD

March 2006, the Shareholders’ Agreement shall forthwith terminate and become null and void, and neither party shall have any claim against the other party in respect of the Shareholders’ Agreement.

3. CONTINUING CONNECTED TRANSACTIONS

As a result of the establishment of Samson Paper JV, the Company holds a 70% shareholding interest in Samson Paper JV through Top Pegasus and thus Samson Paper JV is an indirectly owned subsidiary of the Company. By virtue of its 30% shareholding interest in the Samson Paper JV, United Paper Singapore has become a substantial shareholder of a subsidiary of the Company and thus a connected person of the Company. As United Paper Malaysia is a fellow subsidiary of United Paper Singapore and thus an associate of United Paper Singapore, it is also a connected person of the Company.

On 24 January 2006, Shun Hing, a wholly-owned subsidiary of the Company and Samson Paper JV entered into the Master Agreement with United Paper Malaysia and United Paper Singapore for the purchase of paper and paper board products by Shun Hing and Samson Paper JV from United Paper Malaysia and United Paper Singapore which constitutes continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

THE MASTER AGREEMENT

Date : 24 January 2006 Parties : (i) Shun Hing (ii) Samson Paper JV (iii) United Paper Malaysia (iv) United Paper Singapore Term : From 24 January 2006 to 31 March 2008 Nature of Transaction : Shun Hing will purchase paper and paper board products from United Paper Malaysia or United Paper Singapore. Samson Paper JV will purchase paper and paper board products from United Paper Malaysia. Pricing : The products shall be supplied at prices as negotiated by the parties for each order with reference to the prevailing market prices of the products, and on terms no less favorable to Shun Hing or Samson Paper JV than terms available to parties independent of and not connected with the directors, chief executive and substantial shareholders of the Group or any of their respective associates.

– 10 –

LETTER FROM THE BOARD

• Cap Amounts : The Directors anticipate that the amount of purchases under the Master Agreement for the period from the date of the Master Agreement to 31 March 2006 and for each of the two financial years ending 31 March 2007 and 2008 will not exceed HK$15,733,000, HK$112,800,000 and HK$112,800,000 respectively.

• Basis of Annual Cap : (1) Historical figures of the purchases of paper and paper board products by the Group from United Paper Malaysia and United Paper Singapore as follows: Total amount of

• products purchased

• Year ended 31 March 2004 HK$15,264,077

• Year ended 31 March 2005 HK$13,312,483

• Six months ended 30 September 2005 HK$16,775,520

• (2) Based on the historical figure of the purchases of paper and paper products by the Group from United Paper Malaysia and United Paper Singapore for the six months ended 30 September 2005 in the amount of HK$16,755,520, the estimated amount of purchases of paper and paper board products by the Group for the second half of the financial year ending 31 March 2006 (excluding Samson Paper JV) is expected to be approximately HK$16,000,000. Based on this estimate, it is expected that the amount of purchases of paper and paper products by the Group (excluding Samson Paper JV) for the period from the date of the Master Agreement to 31 March 2006 will be approximately HK$5,333,000, which represents two out of six months of purchases of paper and paper board products by the Group (excluding Samson Paper JV).

– 11 –

LETTER FROM THE BOARD

(3) Based on the amount of purchases of paper and paper products by Samson Paper JV from United Paper Malaysia which increased from approximately RM1.4 million (approximately HK$2.9 million) in October 2005 to approximately RM2.4 million (approximately HK$5 million) in January 2006, Samson Paper JV has budgeted that its monthly purchase of paper and paper board products from United Paper Malaysia is expected to be approximately RM2,530,000 (approximately HK$5,262,400) with reference to purchases of paper and paper board products by Samson Paper JV from United Paper Malaysia from October 2005 to January 2006. Accordingly, purchase of paper and paper board products by Samson Paper JV is expected to be approximately HK$10,400,000 for February to March 2006. The total cap of purchases of paper and paper board products by the Group (including Samson Paper JV) pursuant to the Master Agreement from the date of the Master Agreement to 31 March 2006 is therefore HK$15,733,000.

(4) Based on the historical figure of the purchases of paper and paper products by the Group from United Paper Malaysia and United Paper Singapore for the six months ended 30 September 2005 in the amount of HK$16,755,520, the estimated amount of purchases of paper and paper board products by the Group (excluding Samson Paper JV) for the second half of the financial year ending 31 March 2006 is approximately HK$16,000,000. The annual purchase of paper and paper board products by the Group (excluding Samson Paper JV) is therefore expected to be approximately HK$32,775,520. It is expected that the amount of purchases of paper and paper board products by the Group from United Paper Malaysia and United Paper Singapore will be increased to HK$40,000,000 for each of the two financial years ending 31 March 2007 and 2008, which represents an increase of approximately 22% of the annual purchases of paper and paper board by the Group (excluding Samson Paper JV) compared with the financial year ending 31 March 2006 based on the anticipated increase in the Group’s demand and market prices of the paper and paper products for each of the two financial years ending 31 March 2007 and 2008.

– 12 –

LETTER FROM THE BOARD

The budgeted annual purchases by Samson Paper JV from United Paper Malaysia is estimated to be RM30,360,000 (approximately HK$63,148,800) for each of the two financial years ending 31 March 2007 and 2008. In order to take into account a certain level of buffer for prudent purpose, it is expected that the amount of purchases of paper and paper board products by Samson Paper JV from United Paper Malaysia will be increased to RM35,000,000 (approximately HK$72,800,000) for each of the two financial years ending 31 March 2007 and 2008, which represents an increase of approximately 15% of the annual purchases of paper and paper board products by Samson Paper JV from United Paper Malaysia. Accordingly, the total annual cap of purchases of paper and paper board products by the Group together with the expected purchases of paper and paper board products by Samson Paper JV pursuant to the Master Agreement for each of the two financial years ending 31 March 2007 and 2008 is therefore HK$112,800,000. The annual cap amount for each of the two financial years ending 31 March 2007 and 2008 were determined based on the prices of paper and paper products charged by United Paper Singapore or United Paper Malaysia to Samson Paper JV from October 2005 to January 2006 and the anticipated increase in the Group’s demand of the paper and paper products for each of the two financial years ending 31 March 2007 and 2008 with reference to purchases of paper and paper board products by Samson Paper JV from United Paper Malaysia from October 2005 to January 2006.

4. REASONS FOR AND BENEFITS OF THE DISCLOSEABLE TRANSACTION AND THE CONTINUING CONNECTED TRANSACTIONS

The Company is one of the largest paper merchants in Hong Kong. The joint venture business of Samson Paper JV will involve, among other things, operation of a manufacturing plant (for the purposes of cutting and laminating) in Kuala Selangor, Malaysia and manufacturing, distribution and sale of paper and paper board products. The Company views the investment in Samson Paper JV as an opportunity for the Group to expand its business operations in Malaysia.

United Paper Singapore and United Paper Malaysia have been the Group’s suppliers of paper and paper board products. Their holding company, United Pulp & Paper whose shares are listed on the Singapore Exchange Limited, is owned by the Company as to approximately 19.06% and is an associated company of the Company. It is in the interest of

– 13 –

LETTER FROM THE BOARD

the Group to purchase products from subsidiaries of United Pulp & Paper to enhance their business as the Company has equity interest in United Pulp & Paper. The Directors consider that the Continuing Connected Transactions would not bring disadvantages to the Company.

The Directors (including the independent non-executive Directors) consider that the Shareholders’ Agreement and the Master Agreement were entered into on normal commercial terms and believe that the terms of the Shareholders’ Agreement and the terms of the Master Agreement and the annual caps relating thereto are fair and reasonable and are in the interests of the Shareholders as a whole.

Upon completion of the establishment of Samson Paper JV, the Company shall, on a consolidated basis, be entitled to 70% of the net earnings/loss of Samson Paper JV. The Directors expect that Samson Paper JV will have a positive effect on the profits of the Company.

The Directors are of the opinion that the capital contribution of RM1,575,000 (approximately HK$3,276,000), shareholder’s loan of RM4,085,135 (approximately HK$8,497,081) and corporate guarantees up to RM12,670,000 (approximately HK$26,353,600) will have no material adverse effect on the financial position of the Group.

5. LISTING RULES REQUIREMENTS

As the applicable percentage ratios for the total capital commitment by Top Pegasus to Samson Paper JV (which includes share capital of RM1,575,000 (approximately HK$3,276,000) and shareholder’s loan of RM4,085,135 (approximately HK$8,497,081)) and the amount of the corporate guarantees up to RM12,670,000 (approximately HK$26,353,600) to be provided by Top Pegasus for the banking facilities to be obtained by Samson Paper JV in aggregate exceeds 5% but is less than 25%, the transaction for the establishment of Samson Paper JV constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

The applicable percentage ratios for transactions under the Master Agreement on an annual basis exceed 2.5%. The transactions under the Master Agreement constitute non-exempt continuing connected transactions of the Company under Rule 14A.35 of the Listing Rules, and are subject to the disclosure requirements under Rules 14A.45 to 14A.47 of the Listing Rules and the approval of independent Shareholders under Rule 14A.48 of the Listing Rules.

The Company has obtained from Quinselle Holdings Limited which hold approximately 268,340,000 Shares (approximately 62.51% in nominal value of the securities) giving the right to attend and vote at any general meeting of the Company written approval of the transactions under the Master Agreement. None of the Shareholders is interested in the transactions under the Master Agreement and, as such, none of them would be required to abstain from voting if a general meeting of the Company is convened to approve the transactions under the Master Agreement. Pursuant to Rule 14A.43 of the Listing Rules, the Stock Exchange has granted the Company a waiver from the requirement to hold a general

– 14 –

LETTER FROM THE BOARD

meeting of the Shareholders and permission for the independent Shareholders’ approval of the transactions under the Master Agreement and the annual caps relating thereto to be given in writing.

Quinselle Holdings Limited holds the 268,340,000 Shares in its capacity as trustee of a private unit trust. HSBC International Trustee Limited, acting in its capacity as trustee of another family trust holds the majority units in the private unit trust. The objects of the family trust include Mr. Lee Seng Jin, an executive Director and the deputy chairman and chief executive officer of the Group and his spouse Ms. Sham Yee Lan, Peggy, an executive Director.

6. GENERAL

The Group is principally engaged in investment holding, trading and marketing of paper products and is one of the largest paper merchants in Hong Kong.

Shun Hing is principally engaged in trading and marketing of paper products.

United Paper Malaysia is principally engaged in manufacture and sale of paper.

United Paper Singapore is principally engaged in manufacture and sale of paper and paper products.

United Paper Malaysia and United Paper Singapore are subsidiaries of United Pulp & Paper, the shares of which are listed on the Singapore Exchange Limited.

7. ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee, the letter from the Independent Financial Adviser to the Independent Board Committee and the independent Shareholders, and additional information set out in the appendix to this circular.

Yours faithfully, For and on behalf of the Board SHAM Kit Ying Chairman

– 15 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [82 x 59] intentionally omitted <==

SAMSON PAPER HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 731)

28 February 2006

To the independent Shareholders

Dear Sir and Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular of the Company dated 28 February 2006 (the “Circular”) to the Shareholders, of which this letter forms part. Terms defined in the Circular have the same meanings in this letter unless the context otherwise requires.

We have been appointed by the Board as the Independent Board Committee to advise you as to whether, in our opinion, the terms of the Continuing Connected Transactions, are fair and reasonable so far as the independent Shareholders are concerned.

Tai Fook Capital Limited has been appointed by the Company as the independent financial adviser to advise us and the independent Shareholders on the terms of the Continuing Connected Transactions. Details of its advice, together with the principal factors taken into consideration in arriving at such, are set out in its letter on pages 17 to 23 of the Circular.

Your attention is drawn to the letter from the Board set out on pages 4 to 15 of the Circular and the addition information set out in the appendix to the Circular.

Having taken into account the terms of the Continuing Connected Transactions and the advice given by Tai Fook Capital Limited, we consider that the Continuing Connected Transactions are on normal commercial terms, are fair and reasonable and are in the interests of the Company and the independent Shareholders as a whole.

Yours faithfully,

PANG Wing Kin, Patrick TONG Yat Chong NG Hung Sui, Kenneth Independent Board Committee

– 16 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter of advice received from Tai Fook Capital Limited to the Independent Board Committee and the independent Shareholders in respect of the Continuing Connected Transactions which has been prepared for incorporation into this circular.

25th Floor New World Tower 16-18 Queen’s Road Central Hong Kong

28 February 2006

To the Independent Board Committee and the independent Shareholders

Samson Paper Holdings Limited 3rd Floor Seapower Industrial Centre 177 Hoi Bun Road Kwun Tong Kowloon Hong Kong

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the independent Shareholders with respect to the terms of the Master Agreement and the annual caps relating thereto, details of which are set out in the Letter from the Board contained in the circular of the Company dated 28 February, 2006 (the “Circular”), of which this letter forms part. Terms used in this letter shall have the same respective meanings as defined in the Circular unless the context otherwise requires.

On 6 February 2006, the Directors announced that Top Pegasus, a wholly-owned subsidiary of the Company, entered into the Shareholders’ Agreement with United Paper Singapore and Samson Paper JV on 24 January 2006 for the establishment of Samson Paper JV to operate a manufacturing plant in Kuala Selangor, Malaysia for the cutting and laminating paper and paper board and to manufacture, distribute and sell paper and paper board. As the Company holds a 70% shareholding interest in Samson Paper JV through Top Pegasus, Samson Paper JV is an indirectly owned subsidiary of the Company. By virtue of its 30% shareholding interest in Samson Paper JV, United Paper Singapore has become a substantial shareholder of a subsidiary of the Company and thus a connected person of the Company. As United Paper Malaysia is a fellow subsidiary of United Paper Singapore, it is an associate of United Paper Singapore and therefore also a connected person of the Company. As the applicable percentage ratios for the transactions under the Master Agreement on an annual basis exceed 2.5%, the Continuing Connected Transactions

– 17 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

constitute non-exempt continuing connected transactions of the Company under Rule 14A.35 of the Listing Rules, and are subject to the disclosure requirements under Rules 14A.45 to 14A.47 of the Listing Rules and the approval of independent Shareholders under Rule 14A.48 of the Listing Rules.

The Company has obtained from Quinselle Holdings Limited which hold approximately 268,340,000 Shares (approximately 62.51% in nominal value of the securities) a written approval giving the right to attend and vote at any general meeting of the Company regarding the transactions under the Master Agreement. None of the Shareholders is interested in the transactions under the Master Agreement and, as such, none of them would be required to abstain from voting if a general meeting of the Company is convened to approve the transactions under the Master Agreement. Pursuant to Rule 14A.43 of the Listing Rules, the Stock Exchange has granted the Company a waiver from the requirement to hold a general meeting of the Shareholders and permission for the independent Shareholders’ approval of the transactions under the Master Agreement and the annual caps relating thereto to be given in writing.

The Independent Board Committee comprising Mr. Pang Wing Kin, Patrick, Mr. Tong Yat Chong and Mr. Ng Hung Sui, Kenneth has been appointed to consider and advise the independent Shareholders on the terms of the Master Agreement and the annual caps relating thereto. In our capacity as the Independent Financial Adviser to the Independent Board Committee and the independent Shareholders, our role is to provide the Independent Board Committee and the independent Shareholders with an independent opinion and recommendation as to whether the terms of the Master Agreement and the annual caps relating thereto are fair and reasonable and whether the Master Agreement is in the interests of the Company and the independent Shareholders as a whole.

BASIS OF OUR OPINION

In formulating our recommendations, we have relied on the information and facts supplied to us and representations expressed by the Directors and/or management of the Company and have assumed that all such information and facts and any representations made to us, for which they are fully responsible, are true, accurate and complete as at the date hereof. We have been advised by the Directors and/or the management of the Company that all relevant information has been supplied to us and that no material facts have been omitted from the information supplied and representations expressed to us. We have also relied on certain information available to the public and have assumed such information to be accurate and reliable. We have no reason to doubt the completeness, truth or accuracy of the information and facts provided and we are not aware of any facts or circumstances which would render such information provided and representations made to us untrue, inaccurate or misleading.

We consider we have reviewed sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted an independent verification of the information nor have we conducted any form of in-depth investigation into the businesses and affairs of the Group.

– 18 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the terms of the Master Agreement, we have considered the following principal factors and reasons:

I. Background and reasons for the Continuing Connected Transactions

The Group is principally engaged in investment holding, trading and marketing of paper products and is one of the largest paper merchants in Hong Kong. Shun Hing, a wholly-owned subsidiary of the Company, is principally engaged in trading and marketing of paper products. Samson Paper JV, a 70% owned subsidiary of the Company, is principally engaged in the operation of a manufacturing plant in Malaysia for cutting and laminating paper and paper board and the manufacture, distribution and sale of paper and paper board.

United Paper Malaysia is principally engaged in manufacture and sale of paper while United Paper Singapore is principally engaged in manufacture and sale of paper and paper products. Both United Paper Malaysia and United Paper Singapore are subsidiaries of United Pulp & Paper, the shares of which are listed on the Singapore Exchange Limited. As at the Latest Practicable Date, the Company owned approximately 19.06% equity interests in United Pulp & Paper.

Pursuant to the Master Agreement, (i) Shun Hing will purchase paper and paper board products from United Paper Malaysia or United Paper Singapore; and (ii) Samson Paper JV will purchase paper and paper board products from United Paper Malaysia.

• (a) Purchase of paper and paper board products by Shun Hing from United Paper Malaysia or United Paper Singapore

As advised by the Directors, in order to protect and strengthen the established brand name, the Group places strong emphasis on the quality of its products and therefore the Group is very stringent in selecting suppliers of paper and paper board products. As a result, United Paper Singapore and United Paper Malaysia have been the Group’s principal suppliers of grey chip board and liner board products for more than 6 years as they are able to provide high quality products at competitive prices and meet the stringent delivery schedules of the Group. As advised by the Directors, more than 95% of the products purchased by Shun Hing from United Paper Malaysia and United Paper Singapore is grey chip board while the remaining includes black liner board, test liner kraft and white line chipboard. The total amount of grey chip board purchased from United Paper Malaysia and United Paper Singapore had accounted for approximately 87.2% and 95.4% respectively of the Group’s total purchase of grey chip board for the year ended 31 March 2005 and the six months ended 30 September 2005.

As a result of the establishment of Samson Paper JV, United Paper Singapore became a connected person of the Company through its 30% shareholding interest in Samson Paper JV, an indirectly owned subsidiary of the Company. As United Paper Malaysia is a fellow subsidiary of United Paper Singapore, it is an associate of United Paper Singapore and therefore also a connected person of the Company. The

– 19 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

transactions between the Group and each of United Paper Singapore and United Paper Malaysia therefore constitute connected transactions of the Group by virtue of the establishment of Samson Paper JV on 24 January 2006.

• (b) Purchase of paper and paper board products by Samson Paper JV from United Paper Malaysia

Samson Paper JV is set up for the purposes of operating a manufacturing plant in Kuala Selangor, Malaysia for the cutting and laminating paper and paper board and manufacturing, distributing and selling paper and paper board (including art paper, woodfree paper, medium paper and test liner). Currently, the major markets of the Company are Hong Kong and the PRC. Therefore, with a view to expanding into the South East Asian market, the Company has set up Samson Paper JV as the first step. Apart from grey chip board, United Paper Malaysia is also a major supplier of medium paper products in Malaysia. As Samson Paper JV is situated near the production site of United Paper Malaysia and taking into account the long term business relationship between the Group and United Paper Malaysia, Samson Paper JV has purchased medium paper products from United Paper Malaysia since October 2005.

Having considered that (1) the Group has established a long and stable business relationship with each of United Paper Singapore and United Paper Malaysia; (2) the Group is satisfied with the reliable services and quality of the products provided by United Paper Singapore and United Paper Malaysia; and (3) the proximity between Samson Paper JV and the production site of United Paper Malaysia can help Samson Paper JV to save certain transportation cost than if the products are purchased from other independent suppliers, we are of the view that the purchase of paper and paper board products by the Group (including Shun Hing and Samson Paper JV) from United Paper Malaysia and United Paper Singapore is in the interests of the Company and independent Shareholders as a whole.

II. Terms of the Agreement

Shun Hing and Samson Paper JV entered into the Master Agreement with United Paper Malaysia and United Paper Singapore on 24 January 2006 for the purchase of paper and paper board products by Shun Hing and Samson Paper JV from United Paper Malaysia and United Paper Singapore. The Master Agreement has a term commencing on 24 January 2006 and ending on 31 March 2008.

The Continuing Connected Transactions are recurring in nature and are in line with the principal businesses of the Group. Pursuant to the Master Agreement, the Continuing Connected Transactions will be carried out in the ordinary and usual course of business of the Group and will be on normal commercial terms. The Directors have also confirmed that the Continuing Connected Transactions will be conducted on an arm’s length basis. We are therefore of the view that the entering into of the Master Agreement in relation to the Continuing Connected Transactions is fair and reasonable and is in the interests of the Company and the independent Shareholders as a whole.

– 20 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

III. Basis of price determination

As stated in the Letter from the Board contained in this Circular, the products from United Paper Malaysia and United Paper Singapore shall be supplied at prices as negotiated by the parties for each order with reference to the prevailing market prices of the products, and on terms no less favorable to Shun Hing or Samson Paper JV than terms available to parties independent of and not connected with the directors, chief executive and substantial shareholders of the Group or any of their respective associates.

• (a) Purchase of paper and paper board products by Shun Hing from United Paper Malaysia or United Paper Singapore

In order to assess the fairness and reasonableness of the pricing of paper and paper board products sold by United Paper Malaysia or United Paper Singapore to Shun Hing, we have reviewed (1) a summary of sales of grey chip board (which is the major products purchased by the Group from United Paper Malaysia and United Paper Singapore as mentioned before) to Hong Kong customers (including the Group) by United Paper Malaysia and United Paper Singapore during the period from January 2004 to June 2005, which is provided by United Pulp & Paper to the Company; and (2) a report published by South-China Paper Merchants Association Limited, which shows the average price of grey chip board supplied by Malaysian manufacturers to Hong Kong customers in 2004. We found that the prices of grey chip board charged by United Paper Malaysia and United Paper Singapore to Shun Hing are (1) comparable to the prices charged by United Paper Malaysia and United Paper Singapore to other independent Hong Kong customers; and (2) comparable to the average price of grey chip board supplied by other Malaysian manufacturers to Hong Kong customers.

• (b) Purchase of paper and paper board products by Samson Paper JV from United Paper Malaysia

In considering the fairness and reasonableness of the pricing of paper and paper board products provided by United Paper Malaysia to Samson Paper JV, we have reviewed (1) the summary of prices of medium paper products charged by United Paper Malaysia to Samson Paper JV and to other independent customers from October 2005 to January 2006, which is provided by United Paper Malaysia to the Company; and (2) a quotation from another medium paper products supplier in Malaysia regarding the price of similar medium paper products being supplied to Samson Paper JV by United Paper Malaysia in January 2006. We noted that the prices charged by United Paper Malaysia to Samson Paper JV are (1) lower than the prices charged by United Paper Malaysia to other independent customers; and (2) lower than the prices of medium paper products as quoted by other independent Malaysian suppliers.

Based on the aforesaid, we are of the view that the pricing policy of the Continuing Connected Transactions is fair and reasonable and is in the interests of the Company and the independent Shareholders as a whole.

– 21 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

IV. Basis of the annual caps

As stated in the Letter from the Board, the Directors anticipate that the amount of purchases under the Master Agreement for the period from the date of the Master Agreement (24 January 2006) to 31 March 2006 and for each of the two financial years ending 31 March 2007 and 2008 will not exceed HK$15,733,000, HK$112,800,000 and HK$112,800,000 respectively. The following table illustrates the breakdown of the annual caps:

			From the date
			of the Master	For the year	For the year
			Agreement to	ending 31	ending 31
			31 March 2006	March 2007	March 2008
			HK$’000	HK$’000	HK$’000
Purchases	by	Shun Hing	5,333,000	40,000,000	40,000,000
Purchases	by	Samson Paper JV	10,400,000	72,800,000	72,800,000
Total			15,733,000	112,800,000	112,800,000

We have reviewed and discussed with the Company the internal projections of the Group in respect of such annual cap amounts. We understand that in determining the annual cap amounts for the purchase of paper and paper board products by Shun Hing from United Paper Malaysia or United Paper Singapore, the following factors have been taken into consideration:

• (i) the historical prices of paper and paper board products charged by United Paper Malaysia and United Paper Singapore to the Group;

• (ii) the increase in demand for the paper and paper board products from United Paper Malaysia and United Paper Singapore by the Group for the year ending 31 March 2006 as compared to the year ended 31 March 2005 due to the increase in demand for such products by the Group’s customers;

• (iii) the product mix of the goods purchased by Shun Hing from United Paper Malaysia or United Paper Singapore will not be materially deviated from the existing one; and

• (iv) a certain level of buffer in respect of the possible increase in the market prices of the paper and paper board products with reference to the increase in average prices of grey chip board supplied by Malaysian manufacturers to Hong Kong customers by approximately 8.1% from 2003 to 2004 as illustrated in the reports published by South-China Paper Merchants Association Limited.

– 22 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Besides, we understand that in determining the annual cap amounts for the purchase of paper and paper board products by Samson Paper JV from United Paper Malaysia, the following factors have been taken into consideration:

• (i) the expected annual sales volume of medium paper products of Samson Paper JV;

• (ii) the initial price charged by United Paper Malaysia to Samson Paper JV for the medium paper products;

• (iii) the projected product mix of paper and paper board products purchased by Samson Paper JV from United Paper Malaysia will remain unchanged; and

• (iv) a certain level of buffer in respect of the possible increase in the market prices of medium paper products with reference to the increase in average prices of Malaysian medium paper products in the past years. Based on the information provided by the Company which is derived from PPI Asia News, the average prices of Malaysian medium paper products have been increased by approximately 16.3% from the first quarter of 2003 to the last quarter of 2004.

Based on the above and after taking into account the recurring nature of the Continuing Connected transactions and that the terms of the Master Agreement are determined between each parties to the Master Agreement after arm’s length negotiation, we consider that the level of the total annual caps was made by the Directors after due and careful consideration and therefore, we concur with the Directors’ view that the basis for determining the annual caps and the annual caps are fair and reasonable so far as the Company and independent Shareholders are concerned.

RECOMMENDATION

Having considered the above principal factors and reasons, we consider the Continuing Connected Transactions are on normal commercial terms, the terms of the Master Agreement and the annual caps relating thereto are fair and reasonable and the Master Agreement is in the interests of the Company and the independent Shareholders as a whole.

Yours faithfully, For and on behalf of Tai Fook Capital Limited Derek C.O. Chan April Chan Managing Director Director

– 23 –

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 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 contained herein misleading.

2. DISCLOSURE OF DIRECTORS’ INTEREST

As at the Latest Practicable Date, the interests of the Directors and chief executive of the Company in the shares, underlying shares of the Company or its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required to be entered in the register maintained by the Company pursuant to section 352 of the SFO; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as contained in the Listing Rules, were as follows:

			**Number of **	Shares beneficially held	Shares beneficially held
		Personal	Corporate	Family	Other
	Capacity	interest	interest	interest	interest	Total	Percentage
Mr. LEE Seng Jin	Beneficial owner	11,624,000	–	16,712,556	268,340,000	296,676,556	69.11%
	& beneficiary				(Note)
	of trust
Ms. SHAM Yee	Beneficial owner	572,556	16,140,000	11,624,000	268,340,000	296,676,556	69.11%
Lan, Peggy	& beneficiary				(Note)
	of trust
Mr. CHOW Wing	Beneficial owner	540,000	–	–	–	540,000	0.13%
Yuen

Note: Shares were held by Quinselle Holdings Limited, acting in its capacity as trustee of a private unit trust. HSBC International Trustee Limited, acting in its capacity as trustee of a family trust holds the majority units in the private unit trust. The object of the family trust include Mr. Lee Seng Jin and Ms. Sham Yee Lan, Peggy.

Apart from the interests disclosed above, as at the Latest Practicable Date, the Directors and chief executives of the Company also held shares in certain subsidiaries of the Company solely for the purpose of ensuring that the relevant subsidiary has more than one member.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executives of the Company had any interest or short position in the Shares or underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) to be entered in the register required to be kept by the

– 24 –

GENERAL INFORMATION

APPENDIX

Company pursuant to section 352 of the SFO; or (c) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as contained in the Listing Rules.

3. DIRECTORS’ INTERESTS IN CONTRACTS

• (a) As at the Latest Practicable Date, none of the Directors had entered, or proposed to enter into a service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation).

• (b) Save as disclosed herein, as at the Latest Practicable Date, none of the Directors is materially interested in any contract or arrangement subsisting at the date hereof which is significant in relation to the business of the Group as a whole.

• (c) As at the Latest Practicable Date, none of the Directors nor the Independent Financial Adviser had any direct or indirect interest in any assets which had been acquired, or disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group, since 31 March 2005, the date to which the latest published audited consolidated financial statements of the Company were made up.

4. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to the Directors and chief executive of the Company, the following persons or corporations (not being Directors or chief executive of the Company), had an interest in the Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO were as follows:

Long Position in the Shares

		Approximate
		percentage of
		interest to total
		issued share capital
Name of Shareholder	Number of Shares	of the Company
Quinselle Holdings Limited	268,340,000	62.51%
(Notes 1 & 2)
HSBC International Trustee Limited	268,340,000	62.51%
(Notes 1 & 2)

– 25 –

GENERAL INFORMATION

APPENDIX

Notes:

1. Quinselle Holdings Limited holds the 268,340,000 Shares in its capacity as trustee of a private unit trust. HSBC International Trustee Limited, acting in its capacity as trustee of a family trust, holds the majority units in the private unit trust.

2. None of the Directors of the Group is a director or employee of Quinselle Holdings Limited and HSBC International Trustee Limited.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person who had an interest or short position in the shares or underlying shares of the Company 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 was directly or indirectly, interested 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 or had any options in respect of such capital.

5. LITIGATION

As at the Latest Practicable Date, so far as the Directors are aware, no member of the Group is engaged in any litigation or arbitration proceedings of material importance and there is no litigation or claims of material importance known to the Directors to be pending or threatened by or against the Company or any member of the Group.

6. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2005 (being the date to which the latest published audited consolidated financial statements of the Company were made up).

7. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors or their respective associates had any interest in any business which competes or may compete, either directly or indirectly with any business of the Group.

8. EXPERT

• (a) The following is the qualification of the expert which has given opinion or advice which are contained in this circular:

Name Qualifications Tai Fook Capital Limited a corporation licensed to carry out type 6 (advising on corporate finance) regulated activity under the SFO

– 26 –

GENERAL INFORMATION

APPENDIX

• (b) As at the Latest Practicable Date, the Independent Financial Adviser was not interested beneficially nor non-beneficially in any shares in the Company or any of its subsidiaries nor any right or option (whether legally enforceable or not) to subscribe for or nominate persons to subscribe for securities in the Company or any of its subsidiaries.

• (c) The Independent Financial Adviser has given and has not withdrawn its written consent to the issue of this circular with the inclusion of the texts of its letter and references to its name, in the form and context in which they respectively appear.

9. GENERAL

• (a) The qualified accountant of the Company is Mr. Lee Yue Kong, Albert who is a Certified Public Accountant. Mr. Lee is an associate member of the Institute of Chartered Accountants in Australia and the Hong Kong Institute of Certified Public Accountants.

• (b) The secretary of the Company is Mr. Lee Yue Kong, Albert, an executive Director. Mr. Lee is an associate member of the Institute of Chartered Accountants in Australia and the Hong Kong Institute of Certified Public Accountants.

• (c) The registered office of the Company is situated at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda. The head office and principal place of business of the Company is situated at 3rd Floor, Seapower Industrial Centre, 177 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong.

• (d) The principal share registrar and transfer office of the Company is Butterfield Corporate Services Limited situated at 6 Front Street, Hamilton, Bermuda. The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited situated at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (e) The English text of this circular shall prevail over the Chinese text in case of inconsistency.

10. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at 3rd Floor, Seapower Industrial Centre, 177 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong during normal business hours up to and including 14 March 2006:

• (a) the Master Agreement between Shun Hing, Samson Paper JV, United Paper Malaysia and United Paper Singapore dated 24 January 2006;

• (b) the letter from the Independent Financial Adviser, the text of which is set out in this circular;

– 27 –

GENERAL INFORMATION

APPENDIX

• (c) the letter from the Independent Board Committee, the text of which is set out in the circular; and

• (d) the written consent referred to in the paragraph headed “Expert” of this appendix.

– 28 –