DT Capital Limited — Proxy Solicitation & Information Statement 2002

Aug 12, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your shares in Interchina Holdings Company Limited, you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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.

國中控股有限公司

INTERCHINA HOLDINGS COMPANY LIMITED

(Incorporated in Hong Kong with limited liability)

DISCLOSEABLE TRANSACTION

9 August 2002

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CONTENTS

Page

Definitions 1

Letter from the Board
Introduction 3
Agreement 4
Information on Equal Smart 4
Reason for the Acquisition 5
Further Information 6

Appendix – General Information
Responsibility Statement 7
Directors’ Interests in Securities 7
Directors’ Interests in Contracts 7
Substantial Shareholders 8
Directors’ Interests in Assets 8
Service Contract 8
Litigation 8
Material Changes 8
Miscellaneous 9

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DEFINITIONS

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

"Acquisition"
the acquisition of the entire issued share capital of Equal Smart;

"ACT2"
ACT2 China Un Limited is a company incorporated in Hong Kong and, together with its ultimate beneficial owners, is independent of and not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined in the Listing Rules);

"Agreement"
a sale and purchase agreement entered into between the Company and Mr. Wong Man Kan on 19 July 2002;

"Associates"
has the meaning ascribed thereto in the Listing Rules;

"Board"
the board of Directors;

"Company"
Interchina Holdings Company Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange;

"Consideration"
a sum of HK$283,000,000, being the consideration for the Acquisition;

"Directors"
the directors of the Company;

"Equal Smart"
Equal Smart Profits Limited, a company incorporated in British Virgin Islands on 12 July 2001;

"Group"
the Company and its subsidiaries;

"HK$"
Hong Kong dollars, the lawful currency in Hong Kong;

"Hong Kong"
the Hong Kong Special Administrative Region of the PRC;

"Latest Practicable Date"
6 August 2002, being the latest practicable date for ascertaining certain information referred to herein prior to the printing of this circular;

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DEFINITIONS

"Listing Rules"
The Rules Governing the Listing of Securities on the Stock Exchange;

"PRC"
The People's Republic of China;

"Property"
Basement levels 1 and 2, and the 1st and 2nd levels of the commercial podium of Highness Garden situated at No. 1546, Dalian Road, Yangpu District, Shanghai, People's Republic of China, the gross area of which is approximately 18,370.15 square meters;

"SDI Ordinance"
Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of Hong Kong);

"Share(s)"
shares of HK$0.10 each in the issued share capital of the Company;

"Shareholder(s)"
registered holder(s) of Shares;

"Stock Exchange"
The Stock Exchange of Hong Kong Limited;

"US$"
United States dollars, the lawful currency of the United States of America; and

"%"
per cent.

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LETTER FROM THE BOARD

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國中控股有限公司

INTERCHINA HOLDINGS COMPANY LIMITED

(Incorporated in Hong Kong with limited liability)

Executive Directors:
Mr. Zhang Yang (Chairman)
Mr. Liu Shunxin (Honorary Chairman)
Mr. Hui Ho Ming, Herbert (Deputy Chairman)
Mr. Lam Cheung Shing, Richard
Mr. Chan Wing Yuen, Hubert
Mr. Jack Jiyei Zhang

Registered Office:
45th Floor
Far East Finance Centre
16 Harcourt Road
Admiralty
Hong Kong

Independent Non-executive Directors:
Mr. Lee Peng Fei, Allen
Mr. Wu Wai Chung
Mr. Wong Hon Sum
Ms. Ha Ping

9 August 2002

To the Shareholders

Dear Sir or Madam,

DISCLOSABLE TRANSACTION

INTRODUCTION

It was announced by the Company on 22 July 2002 that the Company and Mr. Wong Man Kan entered into an unconditional sale and purchase agreement on 19 July 2002 for the acquisition of the entire issued share capital of Equal Smart at a consideration of HK$283,000,000.

The Acquisition constitutes a discloseable transaction for the Company under the Listing Rules.

The purpose of this circular is to provide the Shareholders with further information of the Acquisition.

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LETTER FROM THE BOARD

AGREEMENT

Date : 19 July 2002

Parties : Vendor : Mr. Wong Man Kan, an independent third party not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined in the Listing Rules). As at the Latest Practicable Date, Mr. Wong Man Kan did not hold any interest in the share capital of the Company.

Purchaser : The Company

Assets acquired : 1 share of US$1.00 in the capital of Equal Smart, representing its entire issued share capital

Consideration : The Consideration is a sum of HK$283,000,000 which was determined after arm's length negotiations by reference to the estimated market price of the Property being the sum of RMB307,000,000 (approximately HK$289,501,000) as set out in a valuation report issued by an independent PRC valuer, Shanghai Real Estate Appraisers Co. Ltd, on 5 July 2002 after taking into account of the market prices of comparable properties in Shanghai.

The Consideration was funded by internal resources of the Company. A sum of HK$226,400,000, as part of the Consideration, was paid on 26 July 2002 in accordance with the terms of the Agreement and a sum of HK$56,600,000, being the balance of the Consideration, will be payable within 6 months from the date of the Agreement (i.e. 18 January 2003).

The Directors consider the Consideration and the method of satisfaction of the Consideration to be fair and reasonable and are to the best interests of the Shareholders.

INFORMATION ON EQUAL SMART

Equal Smart was incorporated in the British Virgin Island and beneficially owns the Property. Prior to the Acquisition, the Property was being used as a clubhouse and for the provision of related services.

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LETTER FROM THE BOARD

On 3 July 2002, Equal Smart entered into a project management agreement with ACT2 authorising ACT2 to use the Property for the operation of a clubhouse commencing on 1 August 2002 on a continuous basis. ACT2 shall pay to Equal Smart a fixed monthly consideration of HK$3,000,000 for the authorization to use the Property. Following the Acquisition, the project management agreement will continue to have full force and effect and the Property will continue to be used as a clubhouse while Equal Smart will retain the property ownership of the Property.

Save for the above, Equal Smart does not conduct any business activity or hold any other asset.

Based on the management accounts of Equal Smart, the profit of Equal Smart before and after taxation and extraordinary items in respect of the period commencing from the date of its incorporation to 30 June 2002 was HK$103,981,973. The net tangible asset value of Equal Smart as at 30 June 2002 was about HK$289,622,641.

Equal Smart has become a wholly owned subsidiary of the Company since the Acquisition, and the results of Equal Smart will be consolidated into the books of the Company.

REASON FOR THE ACQUISITION

The Company is principally engaged in property investment and development in Hong Kong and the PRC and has recently focused on the business of environmental protection and water treatment investments.

The Directors consider that the Acquisition coincides with the business strategy of the Company in investing in prime property market in the PRC and expect that the Company will hold the Property as a long term investment. It is also expected that, through the receipt of the monthly consideration from ACT2, the Acquisition will contribute additional operating profit to the Group and hence gives a positive effect on the earnings per share of the Group. In addition, as a result of the Acquisition, there is no adverse effect on the assets and liabilities of the Group.

The Directors believe that the Acquisition is fair and reasonable in the current market conditions, and it is in the best interests of the Company and the Shareholders.

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LETTER FROM THE BOARD

FURTHER INFORMATION

Your attention is drawn to the additional information set out in the Appendix.

Yours faithfully,
On behalf of the Board
Yip Kar Hang, Raymond
Company Secretary

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APPENDIX

GENERAL INFORMATION

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 enquires, 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. DIRECTORS' INTERESTS IN SECURITIES

As at the Latest Practicable Date, the interests of the Directors and chief executives of the Company in the equity and debt securities of the Company and its associated corporations (within the meaning of the SDI Ordinance) which require notification to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including interests which any such Director is deemed or taken to have under Section 31 or Part I of the Schedule to the SDI Ordinance) or which are required to be entered into the register maintained by the Company under Section 29 of the SDI Ordinance or which are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange were as follows:

Name of Directors	Nature of interests	Number of Shares
Zhang Yang	Corporate	1,612,025,000 (Note)

Note: The ordinary shares were held through Wealth Land Development Corp., a company beneficially and wholly owned by Mr. Zhang Yang.

Save as disclosed above, none of the Directors or their associates had any interests in the equity and debt securities of the Company or any of its associated corporations as defined in the SDI Ordinance as at the Latest Practicable Date.

3. DIRECTORS' INTERESTS IN CONTRACTS

None of the Directors is materially interested in any contract or arrangement entered into by any member of the Group subsisting at the date of this circular and which is significant in relation to the business of the Group.

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APPENDIX

GENERAL INFORMATION

4. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 16(1) of the SDI Ordinance, and so far as is known to the Directors, the shareholders who were directly or indirectly interested in 10 per cent. or more of the issued share capital of the Company carrying rights to vote in all circumstances at general meetings of the Company together with the number of shares in which they were deemed to be interested were :

Name	Number of Shares	Percentage of holding
Wealth Land Development Corp. (Note)	1,612,025,000	35.08%

Note: Wealth Land Development Corp. is wholly owned by Mr. Zhang Yang, a Director.

5. DIRECTORS' INTERESTS IN ASSETS

None of the Directors has or has had any direct or indirect material interest in any assets which have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2002, being the date to which the latest published audited consolidated financial statements of the Company were made up.

6. SERVICE CONTRACT

There is no service contract between any proposed Directors and members of the Group which does not expire or is not determinable by the employer within one year without payment of compensation other than statutory compensation.

7. LITIGATION

No member of the Group is engaged in any litigation or arbitration of material importance and the Directors are not aware of any litigation or claims of material importance pending or threatened against any member of the Group.

8. MATERIAL CHANGES

Save as disclosed in the annual report to Shareholders for the financial year ended 31 March 2002, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2002, the date to which the latest published annual consolidated financial statements of the Company were made up.

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APPENDIX
GENERAL INFORMATION

9. MISCELLANEOUS

(a) The registered office of the Company is at 45th Floor, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong.

(b) The Share Registrars is Tengis Limited at 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong.

(c) The secretary of the Company is Mr. Yip Kar Hang, Raymond, who is a member of the American Institute of Certified Public Accountants and the Hong Kong Society of Accountants.

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

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