Dufu Liquor Group Limited — Proxy Solicitation & Information Statement 2011

Jun 13, 2011

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 China Environmental Energy Investment Limited (the “ Company ”), you should at once hand this circular together with 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 transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance on the whole or any part of the contents of this circular.

China Environmental Energy Investment Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 986)

PROPOSED SHARE CONSOLIDATION; CHANGE IN BOARD LOT SIZE AND NOTICE OF SPECIAL GENERAL MEETING

A notice convening a special general meeting of the Company to be held at 9:00 a.m. on Wednesday, 29 June 2011 at Falcon Room II, Gloucester Luk Kwok Hotel, 72 Gloucester Road, Wanchai, Hong Kong is set out on pages 16 to 17 of this circular. Whether or not you are able to attend the special general meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the special general meeting or any adjourned meeting. Completion and delivery of the form of proxy will not preclude you from attending and voting in person at the special general meeting if you so wish.

14 June 2011

• For identification purposes only

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16

– i –

DEFINITIONS

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

“associate(s)”	shall have the meaning ascribed to it under the Listing
	Rules
“Board”	the board of Directors
“CCASS”	the Central Clearing and Settlement System established and
	operated by HKSCC
“Company”	China Environmental Energy Investment Limited, formerly
	known as Nam Hing Holdings Limited, a company
	incorporated in Bermuda with limited liability and the
	issued shares of which are listed on the main board of the
	Stock Exchange
“Consolidated Shares”	consolidated ordinary share(s) of HK0.01 each in the issued
	and unissued share capital of the Company upon the Share
	Consolidation becoming effective
“Director(s)”	director(s) of the Company
“Group”	the Company and its subsidiaries
“HKSCC”	Hong Kong Securities Clearing Company Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Latest Practicable Date”	10 June 2011, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	referred to in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange

– 1 –

DEFINITIONS

“SGM”	the special general meeting of the Company to be held on
	29 June 2011 for the purpose of considering and, if thought
	fit, approving the proposed Share Consolidation
“Share(s)”	ordinary share(s) of HK$0.001 each in the share capital of
	the Company
“Share Consolidation”	the proposed consolidation of every 10 Shares into 1
	Consolidated Share
“Shareholder(s)”	holder(s) of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“%”	per cent.

In the event of any inconsistency, the English text of this circular shall prevail over the Chinese text.

– 2 –

EXPECTED TIMETABLE

Set out below is the expected timetable for the implementation of the Share Consolidation and change in board lot size. The timetable is subject to the results of the SGM and other changes. The Company will notify the Shareholders of any significant changes to the expected timetable by way of announcement(s) as and when appropriate.

Despatch of circular with notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . .Tuesday, 14 June 2011 Latest time for lodging the proxy forms for use at the SGM . . . . . . . . . . . . . . . 9:00 a.m., Monday, 27 June 2011 Date of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m., Wednesday, 29 June 2011 Effective date for the Share Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 30 June 2011 First day for free exchange of existing share certificates for new share certificates . . . . . . . . . . . . . . . . . Thursday, 30 June 2011 Original counter for trading in Shares in board lots of 20,000 Shares temporarily closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m., Thursday, 30 June 2011 Temporary counter for trading in Consolidated Shares in board lots of 2,000 Consolidated Shares (in the form of existing share certificates) opens . . . . . . . . . . . . . . . . . . . . . 9:00 a.m., Thursday, 30 June 2011 Original counter for trading in Consolidated Shares in new board lots of 10,000 Consolidated Shares (in the form of new share certificates) re-opens . . . . . . . . . . . . . . . . . . . . . . . . .9:00 a.m., Friday, 15 July 2011 Parallel trading in Consolidated Shares in the form of new share certificates and existing share certificates commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9:00 a.m., Friday, 15 July 2011 Designated broker starts to stand in the market to provide matching services for odd lots of Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 15 July 2011

– 3 –

EXPECTED TIMETABLE

Temporary counter for trading in Consolidated Shares

in board lots of 2,000 Consolidated Shares

(in the form of existing share certificates) closes . . . . . . . . . . . . . . . . . . . . . 4:00 p.m., Thursday, 4 August 2011

Parallel trading in Consolidated Shares

in the form of new share certificates and

existing share certificates closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 4 August 2011

Designated broker ceases to stand in the market

to provide matching services for odd lots of Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 4 August 2011

Last day for free exchange of

existing share certificates for new share certificates . . . . . . . . . . . . . . . . . Monday, 8 August 2011

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LETTER FROM THE BOARD

China Environmental Energy Investment Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 986)

Executive Directors: Ms. Chen Tong (Chairman) Ms. Deng Hong Mei Ms. Chan Ching Ho, Kitty Mr. Xiang Liang Mr. Lau Chung Yim

Non-executive Director: Ms. Yao Zhengwei Mr. Wang Zhenghua

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business: Room 2211, 22/F. Lippo Centre, Tower Two 89 Queensway, Hong Kong

Independent non-executive Directors:

Mr. Chan Ying Kay Mr. Tse Kwong Chan Ms. Zhou Jue

14 June 2011

To the Shareholders

Dear Sir or Madam,

PROPOSED SHARE CONSOLIDATION; CHANGE IN BOARD LOT SIZE AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

The Company has announced on 27 May 2011 the proposed Share Consolidation and change in board lot size. The purpose of this circular is to provide you with information regarding the Share Consolidation, the change in board lot size and the notice of SGM for the purpose of considering and, if thought fit, approving the ordinary resolution relating to the proposed Share Consolidation.

• For identification purposes only

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LETTER FROM THE BOARD

SHARE CONSOLIDATION AND CHANGE IN BOARD LOT SIZE

Share Consolidation

The Directors propose to implement the Share Consolidation on the basis that every ten (10) issued and unissued Shares of HK$0.001 each in the share capital of the Company will be consolidated into one (1) Consolidated Share of HK$0.01 each in the issued share capital of the Company. Fractional Consolidated Shares will be disregarded and not issued to the Shareholders but all such fractional Consolidated Shares will be aggregated and, if possible, sold for the benefit of the Company. Fractional Consolidated Shares will only arise in respect of the entire shareholding of a holder of the Shares regardless of the number of share certificates held by such holder.

Effects of the Share Consolidation

As at the Latest Practicable Date, the authorized share capital of the Company is HK$1,000,000,000 divided into 1,000,000,000,000 Shares of HK$0.001 each, of which 3,147,090,543 Shares have been allotted and issued as fully paid or credited as fully paid. Upon the Share Consolidation becoming effective, on the basis that the Company does not allot and issue any further Shares prior thereto, the authorized share capital of the Company shall remain at HK$1,000,000,000 divided into 100,000,000,000 Consolidated Shares of HK$0.01 each, of which 314,709,054 Consolidated Shares will be in issue.

The Consolidated Shares will rank pari passu in all respects with each other in accordance with the Company’s memorandum of association and bye-laws. Other than the expenses, including professional fees and printing charges, to be incurred in relation to the Share Consolidation, the implementation thereof will not alter the underlying assets, business operations, management or financial position of the Company or the interests or rights of the Shareholders, save for any fractional Consolidated Shares to which Shareholders may be entitled.

Application for listing of Consolidated Shares

An application will be made to the Stock Exchange for granting the listing of, and permission to deal in, the Consolidated Shares arising from the Share Consolidation and all necessary arrangements will be made for the Consolidated Shares to be admitted into the CCASS established and operated by HKSCC.

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LETTER FROM THE BOARD

Subject to the granting of, the listing of, and permission to deal in, the Consolidated Shares on the Stock Exchange, the Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Consolidated Shares on the Stock Exchange or, under contingent situation, such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

None of the securities of the Company is listed or dealt in on any other stock exchange other than the Stock Exchange and no such listing or permission to deal is being or is proposed to be sought.

Conditions of the Share Consolidation

The Share Consolidation will be completed upon fulfilling all the following conditions:

1. the passing of the necessary ordinary resolution by the Shareholders at the SGM to approve the Share Consolidation; and

2. the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Consolidated Shares as a result of the Share Consolidation.

Change in board lot size

The Board also proposes to change the board lot size for trading in the shares of the Company from 20,000 Shares to 10,000 Consolidated Shares after the Share Consolidation becoming effective. Based on the price of the Shares of HK$0.037 per Share as at the Latest Practicable Date as quoted from the Stock Exchange, the theoretical board lot value of the Shares (assuming the Share Consolidation is completed) will be increased from HK$740 to HK$3,700 after the change in board lot size.

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LETTER FROM THE BOARD

REASONS FOR THE SHARE CONSOLIDATION AND CHANGE IN BOARD LOT SIZE

Pursuant to Rule 13.64 of the Listing Rules, where the market price of the securities of the issuer approaches the extremities of HK$0.01 or HK$9,995.00, the Stock Exchange reserves the right to require the issuer either to change the trading method or proceed with a consolidation or splitting of securities. Recently, the price of the Shares has approached the extremities of HK$0.01 and after considering the possibilities of any future equity fund raising activities for the Company to finance the remaining consideration payable for the proposed acquisition of the Company as announced on 16 May 2011 (the “ Recycling Acquisition ”), the Board is of the opinion that the Share Consolidation would bring about a corresponding increase in the trading price of the Consolidated Shares and in compliance with Rule 13.64 of the Listing Rules. It is also expected that the change in board lot size shall increase the trading amount of each board lot. As a result, the Share Consolidation and change in board lot size would enable the Company to comply with the trading requirements of the Listing Rules. Accordingly, the Board is of the view that the Share Consolidation and change in board lot size are in the interest of the Company and the Shareholders as a whole.

POSSIBLE FUTURE FUND RAISING PLAN

The Company considers that it is necessary to assess any future fund raising opportunities (including both equity and debt fund raising) with financial institutions from time to time to fulfill the financial needs of the Group. The Directors view a healthy cash position is important for the future development of the businesses of the Group.

As at the Latest Practicable Date, the Directors confirmed that no formal discussion on a concrete fund raising plan and timetable has been carried out with any financial institutions, however, the Company has maintained a good relationship with the past underwriters and placing agents of the Company. The Company will take a prudent approach to raise sufficient cash for the future development of the Group in the event that any fund raising opportunities arise.

Under the existing market situation, the Board will use their best endeavor to raise sufficient fund for the Group. When determining which financing methods can be adopted, the Board will consider, among other things, the following factors:

(i) Time

Upon identifying suitable placing agent and investors, issue of new shares under general mandate will be the fastest way to raise fund and is the most suitable for immediate financial needs. Other methods such as issue of new shares under specific mandate, rights issue and open offer will take longer completion time and are subject to higher market uncertainty.

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LETTER FROM THE BOARD

(ii) Fund raising size

Issue of new shares under general mandate is subject to the limitation in number of shares to be issued and the issue price under the Listing Rules. Other methods such as issue of new shares under specific mandate, rights issue and open offer will provide greater flexibility in the fund raising size and determination on the issue terms.

(iii) Cost

Given that the fund raising size under issue of new shares under specific mandate, rights issue and open offer are larger, the relevant cost to the Company will be higher. When the Board negotiates with the placing agent/underwriter (as the case may be) on the commission rate, both parties will consider, among other things, the market sentiment, the availability of potential investors and the issue terms.

The Board will consider every possible fund raising method which is in the interest of the Company and the Shareholders as a whole.

Based on the financing methods currently available to the Group as at the Latest Practicable Date, the Company is of the view that the possible utilizing of the general mandate granted to the Company on 27 April 2011 to issue 629,418,108 new Shares (the “ General Mandate ”), representing approximately 20% of the issued share capital of the Company is the most feasible method available to the Company. Based on the closing price of the Shares of HK$0.037 as at the Latest Practicable Date, the Company could raise around HK$23.29 million by fully utilizing the General Mandate, subject to the then negotiations with the placing agent (including but not limited to (i) the then market sentiment; (ii) the size of the fund raising activities; (iii) the pricing of the new shares). In the event that the negotiation between the Company and the underwriters on the terms of rights issue/open offer exercises (which further discussed in the latter section of this letter) is not successful due to number of factors, which may include (i) the size of the fund raising; (ii) the then market sentiment; (iii) the reasons for the rights issue/open offer; and (iv) underwriting commission, the Company will prefer fund raising exercises in the form of placement. In the event that the Company utilize the General Mandate, the proceeds from the said fund raising will either be used to finance the remaining consideration for the Recycling Acquisition (mainly HK$310 million payable to the vendors for the Recycling Acquisition within 12 months after the completion of the Recycling Acquisition) and/or other acquisition opportunities to be identified by the Group as the Company has from time to time approached by investors for potential investment projects. The Company will also consider other equity fund raising methods such as issue of convertible notes, issue of warrants, issue of new shares under specific mandate and rights issue/open offer. As at the Latest Practicable Date, the Directors expect to utilize the General Mandate and then followed up

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LETTER FROM THE BOARD

a rights issue/open offer exercise to fulfill the future financing needs of the Company (including the remaining consideration for the Recycling Acquisition) as the proceeds from the utilization of the General Mandate (i.e. around HK$23.29 million) may not be able to fulfill the future financing needs of the Company. As such, the Directors consider a rights issue/open offer exercise is likely to be conducted to further strengthen the financial resources of the Company in the future. As at the Latest Practicable Date, the Directors confirmed that no concrete discussion has been made with the underwriters and the placing agents and such negotiation will involve the factors as disclosed abovementioned.

In view of that additional time is required for the completion of a Share Consolidation, the Company considers that the proposed Share Consolidation should be conducted as soon as practicable to avoid any undue delay for any equity fund raising opportunities and the Share Consolidation will not alter the underlying assets, business operations, management or financial position of the Company or the interests or rights of the Shareholders, save for any fractional Consolidated Shares to which Shareholders may be entitled.

Subsequent to approving the Share Consolidation, the Company may conduct equity fund raising in the future, no concrete plan has been formulated yet. In the event that an equity fund raising is carried out, it is likely to be a placing of new shares under General Mandate and set out below is the potential dilution effects to the existing public Shareholders as a result of the said placing and the scenario in which assuming the Recycling Acquisition is completed and allotment of the maximum number of conversion shares upon full conversion of the convertible notes at the initial conversion price.

Shareholders As at the Latest Practicable Date Number of Shares % Lau Chung Yim (Director) 34,125 0.00 The Vendors or its nominee(s) – – Public Shareholders 3,147,056,418 100.00 Potential placee(s) for the full utilization of the General Mandate – – Total 3,147,090,543 100.00	After Share Consolidation becoming effective Number of Consolidated Shares % 3,412 0.00 – – 314,705,642 100.00 – – 314,709,054 100.00	After full utilization of the General Mandate to issue new Shares Number of Consolidated Shares % 3,412 0.00 – – 314,705,642 83.33 62,941,810 16.67 377,650,864 100.00	After full utilization of the General Mandate to issue new Shares and allotment of the maximum number of conversion shares upon full conversion of the convertible notes as a result of the Recycling Acquisition (Note) Number of Consolidated Shares % 3,412 0.00 352,941,176 48.31 314,705,642 43.07 62,941,810 8.62 730,592,040 100.00	After full utilization of the General Mandate to issue new Shares and allotment of the maximum number of conversion shares upon full conversion of the convertible notes as a result of the Recycling Acquisition (Note) Number of Consolidated Shares % 3,412 0.00 352,941,176 48.31 314,705,642 43.07 62,941,810 8.62 730,592,040 100.00
				100.00

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LETTER FROM THE BOARD

Note: The convertible notes is subject to the following conversion restrictions and may not be converted to the extent that, following such conversion, (i) the Company will be in breach of the minimum public shareholding requirement stipulated under Rule 8.08 of the Listing Rules or other relevant requirements under the Listing Rules; (ii) holder(s) of the convertible notes and any parties acting in concert with it/them will become obliged to make a mandatory offer under Rule 26 of The Codes on Takeovers and Mergers and Share Repurchases of the Securities and Futures Commission of Hong Kong; or (iii) holder(s) of the convertible notes and any parties acting in concert with it/them will hold 20% or more of the issued share capital of the Company upon the then conversion (the “ Conversion Restrictions ”).

As at the Latest Practicable Date, the Company has no outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares as at the Latest Practicable Date.

It should be noted that no formal discussion on a concrete fund raising plan and timetable has been carried out with financial institutions as the Recycling Acquisition has not yet completed. However, the Company is in negotiations with the vendors to reduce the portion of HK$310 million payable to the vendors within 12 months after completion of the Recycling Acquisition and to increase the portion of the convertible notes payable to the vendors. As the convertible notes of the Recycling Acquisition shall be mandatory converted upon its maturity under the terms of the sale and purchase agreement and the terms of the convertible notes regarding the Recycling Acquisition (the relevant conversion of the convertible notes is subject to the Conversion Restrictions and there is a situation that the convertible notes may not be fully converted upon its maturity), further details of the Recycling Acquisition (together with the terms of the convertible notes) has been set out in the announcement of the Company dated 16 May 2011 regarding Recycling Acquisition, such arrangement could reduce the potential financial burden caused to the Company. As at the Latest Practicable Date, the Company and the vendors are still in negotiations, a supplemental agreement will be entered and further announcement will be made when the negotiation is finalized.

To satisfy the remaining consideration of HK$30 million in cash on or before completion of the Recycling Acquisition and HK$310 million either in cash or by means of promissory note(s) payable within 12 months after completion of the Recycling Acquisition, the Company will consider other equity financing methods, including but not limited to the issue of convertible notes, issue of warrants, issue of new shares under specific mandate and rights issue/open offer. Currently, it is the intention of the Company to settle the remaining consideration of the Recycling Acquisition through pro-rata equity financing method such as rights issue/open offer as it provides opportunity to each Shareholder to participate the future potential growth of the Company. The Company will from time to time approach the potential underwriters to negotiate on the terms and conditions of such financing method. The negotiations will be commenced after the completion of the Recycling Acquisition and the Shareholders should be reminded that a rights issue/open offer is subject to, among other things, (i) the negotiation between the Company and the underwriters; (ii) the completion of the Recycling Acquisition; and (iii) the then financial position of the Company, such rights issue/open offer may or may not proceed. In the event that the Company is unable to finalize the terms on the potential rights issue/open offer exercises, the Company will seek other equity or debt financing method for the benefits of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

ARRANGEMENT ON ODD LOT TRADING

In order to facilitate the trading of odd lots (if any) of the Consolidated Shares, the Company has appointed Cheong Lee Securities Limited, as an agent to provide matching service, on a best effort basis, for the sale and purchase of odd lots of Consolidated Shares arising from the Share Consolidation. Shareholders who wish to acquire odd lots of the Consolidated Shares to make up a full board lot, or to dispose of their holding of odd lots of the Consolidated Shares should contact Mr. Lau Ka Lung at telephone number (852) 3426 6324 during office hours. Shareholders should note that successful matching of the sale and purchase of odd lots of the Consolidated Shares is not guaranteed. Please refer to the section headed “EXPECTED TIMETABLE” on pages 3 to 4 of this circular for the period during which the Company will provide matching service for the sale and purchase of odd lots of the Consolidated Shares.

As at the Latest Practicable Date, the Company has no outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares as at the Latest Practicable Date.

EXCHANGE OF SHARE CERTIFICATES

Subject to the Share Consolidation becoming effective, Shareholders may submit share certificates for existing Shares to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, between 30 June 2011 and 8 August 2011 (both dates inclusive) during the business hours, to exchange, at the expense of the Company, for certificates of the Consolidated Shares. It is expected that the new certificates for the Consolidated Shares will be available for collection within 10 business days after the submission of the existing share certificates to the branch share registrar for exchange. Thereafter, the existing share certificates for the Shares will cease to be valid for delivery, trading and settlement purpose but will remain effective as documents of legal title and will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may from time to time be specified by Stock Exchange) per existing share certificate cancelled or new share certificate issued (whichever is the higher) by shareholders. The existing share certificates are in light blue colour and the new share certificates will be in green colour.

EXPECTED TIMETABLE

The expected timetable for the implementation of the Share Consolidation and change in board lot size was set out on pages 3 to 4 of this circular.

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LETTER FROM THE BOARD

FUND RAISING EXERCISE OF THE COMPANY IN THE PAST TWELVE MONTHS

Save for the below, the Company has not conducted any other fund raising exercise in the past twelve months immediately preceding the Latest Practicable Date.

Date of				Actual use of proceeds as
announcement	Event	Net proceeds	Intended use of proceeds	at the latest practicable date
2 July 2010	The placing of	Approximately	Up to approximately HK$100 million for	HK$96 million has been paid as refundable
	convertible bonds	HK$106 million	financing the acquisition set out in the	earnest money for the Recycling Acquisition.
	for the amount of		Company’s announcement dated 16 July 2010	Approximately HK$6.4 million have been
	HK$110 million		and the balance of not more than HK$50	used for working capital of the Group and
	(the “CB Placing”)		million will be used as general working capital	HK$3.6 million for professional fees
			to maintain liquidity and net current assets
			position of the Group and the remaining
			balance for general acquisition activities.

Dilution effects

As extracted from the information of the circular of the Company dated 30 July 2010 regarding the CB Placing (the “ CB Placing Circular ”) and the relevant announcements/next day disclosure, the convertible bonds with principal amounts of HK$110 million were placed and subsequently converted into 768,607,636 shares of the Company (the “ Conversion Shares ”) at the then conversion price, representing (i) approximately 127.42% of the then issued share capital of the Company; and (ii) approximately 56.03% of the then issued share capital of the Company as enlarged by the Conversion Shares.

Please refer to the CB Placing Circular and the relevant announcements/next day disclosure for further information. As at the Latest Practicable Date, the abovementioned convertible bonds have already been fully converted into Conversion Shares.

Date of				Actual use of proceeds as
announcement	Event	Net proceeds	Intended use of proceeds	at the latest practicable date
31 January 2011	The rights issue	Approximately	As to approximately 90% for financing the	HK$174 million has been paid as deposit for
	(on the basis of	HK$198.26 million	Recycling Acquisition if materializes,	Recycling Acquisition; HK$10.24 million has
	twenty-six rights		while as to approximately 10% for (i) general	been used for redemption of convertible bonds
	shares for every		corporate working capital of the Group;	due in 2013; HK$6.4 million for professional
	one new share)		and/or (ii) reduction of liabilities of the Group;	fee and HK$7.6 million held as bank deposit
	(the “Right Issue”)		and/or (iii) financing any future investment	and intended to be used as general working
			opportunities to be identified by the Company,	capital
			however, if the Recycling Acquisition is not
			materializes, the Company will apply all
			the net proceeds from the Rights Issue for
			(i) general corporate working capital of the
			Group; and/or (ii) reduction of liabilities of
			the Group; and/or (iii) financing any future
			investment opportunities to be identified by
			the Company.

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LETTER FROM THE BOARD

Dilution effects

As extracted from the information of the prospectus of the Company dated 31 March 2011 regarding the Rights Issue (the “ Rights Issue Prospectus ”), the total number of rights shares is 3,030,531,634 (the “ Rights Shares ”), representing (i) approximately 2,600% of the then issued share capital of the Company; and (ii) approximately 96.30% of the of the then issued share capital of the Company as enlarged by the Rights Shares.

Please refer to the Rights Issue Prospectus and the relevant announcements for further information.

SGM

A notice convening the SGM to be held at 9:00 a.m. on Wednesday, 29 June 2011 at Falcon Room II, Gloucester Luk Kwok Hotel, 72 Gloucester Road, Wanchai, Hong Kong is set out on pages 16 to 17 of this circular.

Whether or not you are able to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the special general meeting or any adjourned meeting. Completion and delivery of the form of proxy will not preclude you from attending and voting in person at the special general meeting if you so wish.

No Shareholder has any material interest in the Share Consolidation. Therefore no Shareholder is required to abstain from voting at the SGM in respect of the ordinary resolutions to approve the same.

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LETTER FROM THE BOARD

RECOMMENDATION

Having considered the needs for possible fund raising activities to be conducted after the proposed Share Consolidation and the respective potential dilution effects to the existing public Shareholders, the Directors are of the opinion that the proposed Share Consolidation is in the interest of the Company and the Shareholders as a whole and recommend you to vote in favour of the relevant resolution to be proposed at the SGM.

Subsequent to approving the Share Consolidation, the Company may conduct further equity fund raising as details in this letter. Shareholders should note the risk of the potential dilution effect which may be resulted from the possible further equity fund raising.

For easy illustrative purpose only, assuming a Shareholder owned 1,000,000 shares of the Company as at the date of the CB Placing (the “ Original Shares ”), representing approximately 0.16% of the then issued share capital of the Company and after the full conversion of the convertible bonds under the CB Placing, the Original Shares would be diluted from approximately 0.16% to approximately 0.0729% of the then issued share capital of the Company. In the event that such Shareholder did not participate the Rights Issue and the shareholding of such Shareholder would be further diluted from approximately 0.0729% to approximately 0.0019% of the then issued share capital of the Company.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules on the Stock Exchange for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

By Order of the Board

China Environmental Energy Investment Limited Deng Hong Mei

Director

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NOTICE OF SPECIAL GENERAL MEETING

China Environmental Energy Investment Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 986)

NOTICE IS HEREBY GIVEN that a special general meeting (the “ SGM ”) of the shareholders of China Environmental Energy Investment Limited (the “ Company ”) will be held at 9:00 a.m. on Wednesday, 29 June 2011 at Falcon Room II, Gloucester Luk Kwok Hotel, 72 Gloucester Road, Wanchai, Hong Kong for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution of the Company.

ORDINARY RESOLUTION

“ THAT conditional upon The Stock Exchange of Hong Kong Limited granting approval for the listing of, and permission to deal in, the Consolidated Shares (as defined below) in issue, with effect from Thursday, 30 June 2011, every 10 existing issued and unissued ordinary shares of HK$0.001 each in the share capital of the Company be consolidated into 1 consolidated share of HK$0.01 each (each a “ Consolidated Share ”), and such Consolidated Share(s) shall rank pari passu in all respects with each other and have the rights and privileges and be subject to the restrictions in respect of ordinary shares contained in the bye-laws of the Company and any one or more directors be and is/are hereby authorized for and on behalf of the Company to sign, execute, perfect, and/or deliver any document and to do all such acts, deeds and things and to effect all necessary actions as they may consider necessary or desirable in order to effect, implement and complete any and all the aforesaid matters.”

By Order of the Board

China Environmental Energy Investment Limited Deng Hong Mei Director

Hong Kong, 14 June 2011

• For identification purposes only

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NOTICE OF SPECIAL GENERAL MEETING

Registered office: Head Office and principal place of Clarendon House business: 2 Church Street Room 2211, 22/F. Hamilton HM 11 Lippo Centre, Tower Two Bermuda 89 Queensway, Hong Kong

Notes:

1. Any shareholder of the Company (the “Shareholder(s)”) entitled to attend and vote at the SGM shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a Shareholder.

2. The form of proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.

3. Delivery of the form of proxy shall not preclude a Shareholder from attending and voting in person at the SGM and in such event, the form of proxy shall be deemed to be revoked.

4. Where there are joint Shareholders any one of such joint Shareholder may vote, either in person or by proxy, in respect of such shares as if he were solely entitled thereto, but if more than one of such joint Shareholders be present at the SGM the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint Shareholders, and for this purpose seniority shall be determined by the order in which the names stand in the register of shareholders of the Company in respect of the joint holding.

5. The form of proxy and (if required by the board of directors of the Company) the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, shall be delivered to the Company’s Branch Share Registrar in Hong Kong, Tricor Tengis Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof at which the person named in the form of proxy proposes to vote or, in the case of a poll taken subsequently to the date of the SGM or any adjournment thereof, not less than 24 hours before the time appointed for the taking of the poll and in default the form of proxy shall not be treated as valid.

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