Galaxy Entertainment Group Limited — Proxy Solicitation & Information Statement 2003

Nov 11, 2003

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this document or as to the action you should take, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your shares in NEW WORLD DEVELOPMENT COMPANY LIMITED , you should at once hand this document and the accompanying proxy form 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 document, 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 document.

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PROPOSALS INVOLVING INCREASE IN AUTHORISED SHARE CAPITAL, GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES

A notice convening an extraordinary general meeting of New World Development Company Limited to be held at Meeting Room 201B (New Wing), Hong Kong Convention & Exhibition Centre, 1 Expo Drive, Wanchai, Hong Kong on Tuesday, 2 December 2003, at 4:00 p.m. (or so soon thereafter as the annual general meeting convened for the same date and place at 3:30 p.m. shall have been concluded or adjourned) is set out on pages 9 to 11 of this document. Whether or not you propose to attend the meeting, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return the same to the registered office of the Company at 30th Floor, New World Tower, 18 Queen’s Road Central, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding of the meeting or the adjourned meeting (as the case may be). Completion and return of a proxy form will not preclude shareholders from attending and voting at the extraordinary general meeting if they so wish.

31 October 2003

DEFINITIONS

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

• “Companies Ordinance”

the Companies Ordinance (Chapter 32) of the Laws of Hong Kong

“Company” New World Development Company Limited, a company incorporated in Hong Kong with limited liability under the Companies Ordinance

• “Directors” directors of the Company

• “Extraordinary General the extraordinary general meeting of the Company to Meeting” be held at Meeting Room 201B (New Wing), Hong Kong Convention & Exhibition Centre, 1 Expo Drive, Wanchai, Hong Kong on Tuesday, 2 December 2003 at 4:00 p.m. (or so soon thereafter as the annual general meeting of the Company convened for the same date and place at 3:30 p.m. shall have been concluded or adjourned), notice of which is set out on pages 9 to 11 of this document

• “Latest Practicable Date” 24 October 2003, being the latest practicable date prior to the printing of this document

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Repurchase Proposal” the proposal to give a general mandate to the Directors to exercise the powers of the Company to repurchase during the period as set out in the Repurchase Resolution Shares up to a maximum of 10% of the issued share capital of the Company as at the date of the Repurchase Resolution

• “Repurchase Resolution” the proposed ordinary resolution as referred to in resolution no. 2 of the notice of the Extraordinary General Meeting

• “Share(s)” fully paid-up share(s) of HK$1.00 each in the share capital of the Company

• “Share Repurchase Rules” the relevant rules set out in the Listing Rules to regulate the repurchase by companies with primary listing on the Stock Exchange of their own securities on the Stock Exchange

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

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DEFINITIONS

“Takeover	Code”	The Hong Kong Code on Takeovers and Mergers
“HK$”		Hong Kong dollars, the lawful currency of Hong Kong
		Special Administrative Region of the People’s Republic
		of China

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LETTER FROM THE MANAGING DIRECTOR

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Directors:

Executive Directors: Dr. CHENG Yu-Tung (Chairman) Dr. CHENG Kar-Shun, Henry (Managing Director) Dr. SIN Wai-Kin LIANG Chong-Hou, David

Registered Office:

30th Floor, New World Tower, 18 Queen’s Road Central, Hong Kong.

Non-executive Directors: The Honourable LEE Quo-Wei Lord SANDBERG Dr. HO Tim CHENG Yue-Pui YEUNG Ping-Leung, Howard Dr. CHA Mou-Sing, Payson* CHENG Kar-Shing, Peter LEUNG Chi-Kin, Stewart CHAN Kam-Ling CHOW Kwai-Cheung CHA Mou-Zing, Victor (alternate director to CHA Mou-Sing, Payson)

* Independent non-executive director

31 October 2003

To shareholders,

Dear Sir or Madam,

PROPOSALS INVOLVING INCREASE IN AUTHORISED SHARE CAPITAL, GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES

INCREASE IN AUTHORISED SHARE CAPITAL

In order that a sufficient number of unissued Shares are available for future purpose, the Directors propose to increase the authorised share capital of the Company from HK$2,500,000,000 to HK$3,300,000,000 by the creation of an additional 800,000,000 Shares. An ordinary resolution to this effect will be proposed at the Extraordinary General Meeting. The Directors have no present intention of issuing any part of that capital.

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LETTER FROM THE MANAGING DIRECTOR

GENERAL MANDATE TO REPURCHASE SHARES

At the extraordinary general meeting of the Company held on 26 November 2002, a general mandate was given to the Directors to exercise the powers of the Company to repurchase Shares. Such mandate will lapse at the conclusion of the forthcoming annual general meeting of the Company. The Directors propose to seek your approval of the Repurchase Resolution to be proposed at the Extraordinary General Meeting. An explanatory statement as required under the Share Repurchase Rules to provide the requisite information of the Repurchase Proposal is set out in the appendix hereto.

GENERAL MANDATE TO ISSUE SHARES

It will also be proposed at the Extraordinary General Meeting two ordinary resolutions respectively granting to the Directors a general mandate to allot, issue and deal with Shares not exceeding 20% of the issued share capital of the Company at the date of the resolution and adding to such general mandate so granted to the Directors any Shares representing the aggregate nominal amount of the Shares repurchased by the Company after the granting of the general mandate to repurchase up to 10% of the issued share capital of the Company at the date of the Repurchase Resolution.

EXTRAORDINARY GENERAL MEETING

On pages 9 to 11 of this document, you will find a notice convening the Extraordinary General Meeting at which:

• an ordinary resolution will be proposed to increase the authorised share capital of the Company from HK$2,500,000,000 to HK$3,300,000,000;

• an ordinary resolution will be proposed to grant to the Directors a general mandate to exercise all powers of the Company to repurchase on the Stock Exchange Shares representing up to 10% of the issued share capital of the Company as at the date of the Repurchase Resolution;

• an ordinary resolution will be proposed to grant to the Directors a general mandate to authorise the Directors to issue, allot and deal with Shares not exceeding 20% of the issued share capital of the Company as at the date of such resolution; and

• an ordinary resolution will be proposed to extend the general mandate which will be granted to the Directors to issue, allot and deal with additional Shares by adding to it the number of Shares repurchased under the Repurchase Proposal after the granting of the general mandate.

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LETTER FROM THE MANAGING DIRECTOR

ACTION TO BE TAKEN

A proxy form for use at the Extraordinary General Meeting is enclosed herewith. Whether or not you intend to attend the Extraordinary General Meeting, you are requested to complete the proxy form and return it to the registered office of the Company at 30th Floor, New World Tower, 18 Queen’s Road Central, Hong Kong not less than 48 hours before the time appointed for holding the Extraordinary General Meeting or the adjourned meeting (as the case may be). Completion and return of a proxy form will not prevent shareholders from attending and voting at the Extraordinary General Meeting if they so wish.

RECOMMENDATION

The Directors believe that the increase in authorised share capital, the Repurchase Proposal and the general mandate for Directors to issue new Shares are all in the best interests of the Company and its shareholders. Accordingly, the Directors recommend that all shareholders should vote in favour of the resolutions set out in the notice of Extraordinary General Meeting.

By Order of the Board CHENG Kar-Shun, Henry Managing Director

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EXPLANATORY STATEMENT

APPENDIX

This appendix serves as an explanatory statement required under Rule 10.06(1)(b) of the Listing Rules to provide you with the information necessary for your consideration of the Repurchase Proposal.

This appendix also constitutes the memorandum required under Section 49BA(3) of the Companies Ordinance.

1. Share Capital

As at the Latest Practicable Date, the issued share capital of the Company comprised 2,219,544,694 Shares.

Subject to the passing of the Repurchase Resolution and on the basis that no further Shares are issued or repurchased prior to the Extraordinary General Meeting, the Company would be allowed under the Repurchase Resolution to repurchase a maximum of 221,954,469 Shares representing not more than 10% of the issued share capital of the Company at the Latest Practicable Date.

2. Reasons for Repurchase

The Directors believe that the Repurchase Proposal is in the best interests of the Company and its shareholders. Such repurchase may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets and/or earnings per Share of the Company and will only be made when the Directors believe that such a repurchase will benefit the Company and its shareholders.

3. Funding of Repurchase

In repurchasing any Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum and articles of association and the Companies Ordinance. The Companies Ordinance provides that the amount of capital repaid in connection with a share repurchase may only be paid from the distributable profits of the Company and/or the proceeds of a new issue of Shares, made for the purpose of the repurchase to such an extent allowable under the Companies Ordinance.

There might be an adverse impact on the working capital or gearing position of the Company as compared with the position disclosed in the audited accounts contained in the annual report for the year ended 30 June 2003 in the event that the power to repurchase Shares pursuant to the Repurchase Proposal was to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the power to repurchase Shares pursuant to the Repurchase Proposal to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

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EXPLANATORY STATEMENT

APPENDIX

4. Share Prices

The highest and lowest prices at which the Shares have traded on the Stock Exchange in each of the previous twelve months before the Latest Practicable Date are as follows:

		Shares
	Highest		Lowest
	HK$		HK$
October 2002	4.725		3.825
November 2002	4.875		4.375
December 2002	4.650		3.875
January 2003	4.275		3.625
February 2003	3.800		3.425
March 2003	3.700		2.575
April 2003	2.825		2.250
May 2003	2.850		2.350
June 2003	3.300		2.775
July 2003	3.425		2.925
August 2003	5.950		3.425
September 2003	6.800		5.550

5. Undertaking

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Resolution and in accordance with the Listing Rules and the applicable laws of Hong Kong.

None of the Directors nor, to the best of their knowledge and belief having made all reasonable enquiries, their associates, have any present intention to sell any Shares to the Company or its subsidiaries under the Repurchase Proposal if such is approved by the shareholders.

No other connected persons of the Company (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company or its subsidiaries, or have undertaken not to do so, in the event that the Repurchase Proposal is approved by the shareholders.

6. Takeover Code

If on the exercise of the power to repurchase Shares pursuant to the Repurchase Proposal, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeover Code. As a result, a shareholder or group of shareholders acting in concert, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeover Code.

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EXPLANATORY STATEMENT

APPENDIX

As at the Latest Practicable Date, Chow Tai Fook Enterprises Limited held on a beneficial basis 870,785,889 Shares representing 39.23% of the issued share capital of the Company. In the event the Directors exercised in full the power to repurchase Shares pursuant to the Repurchase Proposal, then (if the present shareholdings remains the same) the attributable interest of Chow Tai Fook Enterprises Limited would be increased to approximately 43.59% of the issued share capital of the Company.

In the event that the Repurchase Proposal is exercise in full, an obligation to make a general offer to shareholders under Rules 26 and 32 of the Takeover Code may arise. The Directors have no present intention to exercise the power to repurchase Shares pursuant to the Repurchase Proposal to such an extent as to result in takeover obligations.

7. Share Repurchases made by the Company

The Company had not purchased any Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

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NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the Company will be held at Meeting Room 201B (New Wing), Hong Kong Convention & Exhibition Centre, 1 Expo Drive, Wanchai, Hong Kong on Tuesday, 2 December 2003 at 4:00 p.m. (or so soon thereafter as the annual general meeting of the Company convened for the same date and place at 3:30 p.m. shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing the following resolutions which will be proposed as Ordinary Resolutions of the Company:

ORDINARY RESOLUTIONS

1. “ THAT the authorised share capital of the Company be and is hereby increased from HK$2,500,000,000 to HK$3,300,000,000 by the creation of an additional 800,000,000 shares of HK$1.00 each in the capital of the Company.”

2. “ THAT :

3. (a) subject to paragraph (b) below, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase shares of HK$1.00 each in the capital of the Company on The Stock Exchange of Hong Kong Limited (“Stock Exchange”) or any other Stock Exchange on which the securities of the Company may be listed and recognised by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in connection with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

4. (b) the aggregate nominal amount of shares of the Company which the Directors of the Company is authorised to repurchase pursuant to the approval in paragraph (a) above shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this Resolution and the said approval shall be limited accordingly; and

5. (c) for the purposes of this Resolution,

“Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

  - (ii) the expiration of the period within which the next annual general meeting of the Company is required by law to be held; and

  - (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders in general meeting.”

1. “ THAT :

2. (a) subject to paragraph (c) below and pursuant to Section 57B of the Companies Ordinance, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares of HK$1.00 each in the capital of the Company and to make or grant offers, agreements and options (including bonds, warrants and debentures convertible into shares of the Company) which would or might require the exercise of such power be and is hereby generally and unconditionally approved;

3. (b) the approval in paragraph (a) above shall authorise the Directors of the Company during the Relevant Period (as hereinafter defined) to make or grant offers, agreements and options (including bonds, warrants and debentures convertible into shares of the Company) which would or might require the exercise of such power after the end of the Relevant Period;

4. (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors of the Company pursuant to the approval in paragraph (a) above, otherwise than pursuant to (i) a Rights Issue, (ii) an issue of shares as scrip dividends pursuant to the articles of association of the Company from time to time; (iii) an issue of shares under any option scheme or similar arrangement for the time being adopted for the grant or issue to employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company; or (iv) an issue of shares upon conversion by the bondholders of their bonds into shares of the Company in accordance with the terms and conditions of an issue of convertible guaranteed bonds by a special purpose subsidiary wholly owned by the Company, shall not exceed 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this Resolution, and the said approval shall be limited accordingly; and

5. (d) for the purpose of this Resolution,

“Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by law to be held; and

• (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders in general meeting; and

“Rights Issue” means an offer of shares open for a period fixed by the Directors of the Company to the holders of shares of the Company on the register on a fixed record date in proportion to their then holdings of such shares as at that date (subject to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong applicable to the Company).”

• 4 “ THAT subject to the passing of Resolution Nos. 2 and 3 set out in the notice convening this meeting, the general mandate granted to the Directors of the Company to allot and deal with additional shares pursuant to Resolution No. 3 set out in the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of shares in the capital of the Company repurchased by the Company under the authority granted pursuant to Resolution No. 2 set out in the notice convening this meeting, provided that such amount of shares so repurchased shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the said Resolution.”

By Order of the Board LEUNG Chi-Kin, Stewart Company Secretary

Hong Kong, 31 October 2003

Notes:

1. Any member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him. A proxy need not be a member of the Company.

2. To be valid, a proxy form, together with any power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be lodged with the registered office of the Company at 30th Floor, New World Tower, 18 Queen’s Road Central, Hong Kong not less than 48 hours before the time appointed for holding the meeting or the adjourned meeting (as the case may be).

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