First Pacific Company Limited — M&A Activity 2000

Jul 5, 2000

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.

(Incorporated in Hong Kong with limited liability)

APPLICATION FOR WHITEWASH WAIVER

in relation to the issue of new shares of

Sun Hung Kai & Co. Limited

upon the conversion of subscription rights attaching to

8% listed non-redeemable convertible loan notes due 31 December 2000

An application has been made to the Executive Director of the Corporate Finance Division of the Securities and Futures Commission for a waiver of the general offer obligation under note 1 of the notes on dispensations from Rule 26 of the Takeovers Code in respect of a possible increase of shareholding by AP Emerald Limited (an indirect wholly-owned subsidiary of Allied Properties (H.K.) Limited) from 33.17% to 47.31% upon the maturity of the 8% listed non-redeemable convertible loan notes of the Company on 31 December 2000.

Reference is made to the aggregate face value of HK$512,475,604.50 eight per cent. (8%) listed non-redeemable convertible loan notes due 31 December 2000 ("Notes") issued by Sun Hung Kai & Co. Limited ("Company"). Pursuant to the terms and conditions of the Notes, the Notes will be automatically converted ("Conversion") into new shares of HK$0.20 each in the Company ("Shares") upon maturity of the Notes on 31 December 2000 ("Maturity"), with new warrants ("2003 Warrants") in the proportion of one 2003 Warrant in respect of every five new Shares, each 2003 Warrant conferring upon the holders thereof the right to subscribe in cash for new Shares at any time from the date of issue of the 2003 Warrants (expected to be on 12 January 2001) up to and including 11 January 2003, at HK$3.00 per Share, subject to adjustment.

Pursuant to the Conversion, a total of 341,650,403 new Shares and 68,330,080 new 2003 Warrants will be issued. Approval for the listing of and dealings in these new Shares and 2003 Warrants, as well as any new Shares which will be issued upon the exercise of the conversion rights attaching to the 2003 Warrants, have been given by The Stock Exchange of Hong Kong Limited ("Stock Exchange") on 16 January 1998.

AP Emerald Limited ("APE"), a substantial shareholder of the Company and an indirect wholly owned subsidiary of Allied Properties (H.K.) Limited ("APL"), a company whose securities are listed on the Stock Exchange, is interested in 385,589,216 Shares, representing approximately 33.17% of the issued share capital of the Company. Parties who are/may be acting in concert with APE do not have interest in any Shares. APE is also interested in Notes with a face value of HK$489,193,500.00 which, upon Maturity, will be converted into 326,129,000 new Shares (with 65,225,800 new 2003 Warrants in the proportion of one 2003 Warrant for every five new Shares), representing approximately 28.05% of the existing issued share capital of the Company and approximately 21.68% of the issued share capital of the Company as enlarged by the Conversion.

Upon Conversion of the Notes and assuming no change in APE's shareholding in the Company between the date of this announcement and Maturity, and assuming no exercise of the 2003 Warrants which may be issued to APE as a result of the Conversion, APE will be interested in an aggregate of 711,718,216 Shares, representing approximately 47.31% of the issued capital of the Company as enlarged by the total number of 341,650,403 new Shares to be issued pursuant to the Conversion. Under Rule 26 of the Hong Kong Code on Takeovers and Mergers ("Takeovers Code"), upon Conversion, APE and parties acting in concert with it (including APL) would be required to make a mandatory general offer for all the issued Shares other than those already owned by APE or parties acting in concert with it, unless the general offer obligation is waived.

Set out below is a table showing the Company's shareholding structure so far as is known to the Company at the date hereof (pursuant to its register kept under the Securities (Disclosure of Interests) Ordinance) and the structure immediately after Conversion, assuming no disposal or acquisition of Shares between the date hereof and the Maturity:

			EXISTING						AFTER CONVERSION (on Maturity)
	Number	Approx. % of		Amount of	Approx. % of	Number	Approx. % of	Number of 2003		Amount of	Approx. % of
Shareholder	of Shares	total Shares		Notes (HK$)	total Notes	of Shares	total Shares	Warrants		Notes (HK$)	total Notes

APE		385,589,216					33.17			489,193,500.00							95.46				711,718,216				47.31						65,225,800			0	0
Gold Chopsticks Limited (Note)				198,149,000			17.04				0			0				198,149,000					13.18			0						0		0
Public			578,834,846		49.79				23,282,104.50				4.54			594,356,249			39.51					3,104,280				0					0
Total:	1,162,573,062					100.00		512,475,604.50				100.00			1,504,223,465					100.00		68,330,080					0		0

Note: Gold Chopsticks Limited is an indirect wholly-owned subsidiary of China Online (Bermuda) Limited, a company whose securities are listed on the Stock Exchange.

On 3 July 2000, an application was made in accordance with note 1 of the notes on dispensations from Rule 26 of the Takeovers Code to the Executive Director of the Corporate Finance Division of the Securities and Futures Commission ("Executive") seeking a waiver ("Whitewash Waiver") from the requirement under Rule 26 of the Takeovers Code, for APE and parties acting in concert with it to make a mandatory general offer to the shareholders of the Company ("Shareholders") to acquire all the issued Shares not already owned by APE or parties acting in concert with it (or to be issued to them as a result of Conversion). If the Executive considers it appropriate to grant the Whitewash Waiver, it will be conditional on approval by way of poll at an extraordinary general meeting ("EGM") by the Shareholders other than APE and parties acting in concert with it ("Independent Shareholders").

In addition, a separate resolution will be presented to the Independent Shareholders for a waiver to enable APE and parties acting in concert with it to acquire additional Shares in the Company for the 12 month period immediately after Conversion ("Creeper Proposal").

APE has indicated to the Company that it does not wish to assume an obligation to make a general offer. Accordingly, in the event that the Whitewash Waiver is not granted, or if granted but is not approved by the Independent Shareholders at the EGM, it is unlikely that APE will proceed to make a general offer and it is likely that APE will take steps to dispose of Shares or Notes in such a manner as to keep its holding less than 35% of the issued share capital of the Company upon the issue of Shares as a result of Conversion. The Directors calculated that in order for APE to achieve that holding, it would be necessary for APE to dispose of at least 185,240,004 Shares representing approximately 15.93% of the issued share capital of the Company (or Notes with face value of up to HK$277,860,006.00) before Conversion between the present and 31 December 2000, and the Directors consider that this may have an adverse effect on the Company's share price.

APE has indicated that if the Whitewash Waiver is granted and approved, it is APE's intention to continue to hold the Shares in the Company for long term investment purposes and it has no intention to seek alteration to the board of the Company or the nature of the Company's business.

Shareholders are reminded that there is no assurance whether or not the Executive will grant the Whitewash Waiver. Even if it were to be granted, there is no assurance that the Whitewash Waiver will be approved by the Independent Shareholders at the EGM. Accordingly, Shareholders and investors are recommended to exercise caution when dealing in securities of the Company.

A circular containing details of the application for the Whitewash Waiver and details of the Creeper Proposal, additional information about the Notes, a recommendation from the independent board committee of the Board of Directors, the advice of an independent financial adviser to the independent board committee, as well as the notice of the EGM will be despatched to Shareholders as soon as possible (expected to be on or before 25 July 2000).

By order of the Board of

SUN HUNG KAI & CO. LIMITED

Hester Wong Lam Chun

Company Secretary

Hong Kong, 4 July 2000

The directors of APE jointly and severally accept full responsibility for the accuracy of the information contained in this announcement relating to APE and confirm, having made all reasonable enquiries, that to the best of their knowledge, their opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts relating to APE not contained in this announcement, the omission of which would make any statements in this announcement misleading.

The directors of the Company jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than that relating to APE) and confirm, having made all reasonable enquiries, that to the best of their knowledge, their opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts (other than that relating to APE) not contained in this announcement, the omission of which would make any statements in this announcement misleading.

Please also refer to the published version of this announcement in the iMail.