GC Construction Holdings Limited — Proxy Solicitation & Information Statement 2005

Jan 7, 2005

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 a 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 Fushan Holdings Limited, you should at once hand this circular 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.

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.

福 山 控 股 有 限 公 司 FUSHAN HOLDINGS LIMITED (Incorporated in Hong Kong with limited liability)

(Stock Code: 639)

DISCLOSEABLE TRANSACTION

5 January 2005

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6

DEFINITIONS

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

“Articles”	the articles of the JV Company dated 10 December
	2004 entered into amongst Party A, New Honest and
	Party C for the formation of the JV Company
“Board”	the board of Directors
“Company”	Fushan Holdings Limited, a company incorporated in
	Hong Kong with limited liability, the shares of which
	are currently listed on and dealt in the Stock Exchange
“Directors”	the director(s) of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“JV Agreement”	the joint venture agreement dated 10 December 2004
	entered into amongst Party A, New Honest and Party
	C for the formation of the JV Company
“JV Company”	山西曜鑫煤焦有限公司(Shanxi Yao Zin Coal and
	Coking Company Limited), a sino-foreign joint venture
	to be established under the laws of the PRC in
	accordance with the terms of the JV Agreement and
	the Articles
“Latest Practicable Date”	31 December 2004, being the latest practicable date
	prior to the printing of this circular for ascertaining
	certain information in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“New Honest”	New Honest Limited新誠有限公司, a company
	incorporated in the British Virgin Islands with limited
	liability and wholly owned by the Company
“Party A”	孝義市曜鑫煤焦有限責任公司(Ziao Yi Shi Yao Zin Coal
	and Coking Company Limited), a company established
	in the PRC with limited liability

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DEFINITIONS

“Party C”	山西焦煤集團國際發展有限公司(Shanxi Coal and
	Coking Group International Development Company
	Limited), a company established in the PRC with
	limited liability
“PRC”	the People’s Republic of China
“SFO”	the Securities and Futures Ordinance (Chapter 571 of
	the laws of Hong Kong)
“Share(s)”	share(s) of HK$0.10 each in the share capital of the
	Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC

For the purpose of this circular, all amounts in Renminbi are translated into Hong Kong Dollar at an exchange rate of RMB1.06: HK$1.00.

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LETTER FROM THE BOARD

福 山 控 股 有 限 公 司 FUSHAN HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

(Stock Code: 639)

Executive Directors: Mr. Wong Lik Ping Mr. So Kwok Hoo Mr. Li King Luk

Registered Office:

12th Floor, Kwan Chart Tower No. 6 Tonnochy Road Wanchai Hong Kong

Independent Non-Executive Directors:

Mr. Kee Wah Sze Mr. Choi Wai Yin Mr. Chan Pat Lam

5 January 2005

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

INTRODUCTION

On 14 December 2004, the Board announced that on 10 December 2004, New Honest, a wholly-owned subsidiary of the Company, as the foreign party entered into the JV Agreement and the Articles with Party A and Party C as the PRC parties to establish the JV Company in the form of a sino-foreign equity joint venture for the production and sales of coking coal products. Upon formation of the JV Company, New Honest, Party A and Party C will have 38 per cent., 42 per cent. and 20 per cent. equity interest in the JV Company respectively.

The transaction contemplated under the JV Agreement and the Articles constitutes a discloseable transaction for the Company under the Listing Rules. The purpose of this circular is to give you further information on the JV Agreement and the Articles.

THE JV AGREEMENT AND THE ARTICLES DATED 10 DECEMBER 2004

Parties

Party A: 孝義市曜鑫煤焦有限責任公司 (Ziao Yi Shi Yao Zin Coal and Coking Company Limited), a company established in the PRC with limited liability and, based on the information provided to the Company, owned by the family of Ms. Zhang Jian Ping, chairman and authorized representative of Party A

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LETTER FROM THE BOARD

• Party B: New Honest Limited 新誠有限公司 , a company incorporated in the British Virgin Islands with limited liability and wholly owned by the Company

• Party C: 山西焦煤集團國際發展有限公司 (Shanxi Coal and Coking Group International Development Company Limited), a company incorporated in the PRC with limited liability and, based on the information provided to the Company, owned by various PRC private companies and stateowned companies

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Party A, Party C and their respective directors and ultimate shareholders are not connected persons of the Company (as defined in the Listing Rules).

Formation of the JV Company

Party A, New Honest and Party C as the joint venture parties shall as soon as practicable after the execution of the JV Agreement and the Articles to establish the JV Company in Shanxi, the PRC in accordance with the law and regulations of the PRC. The JV Company is expected to be principally engaged in the production and sales of coking coal products.

The JV Company will be established in the PRC in the form of a sino-foreign equity joint venture and, subject to the approval of the relevant government authorities in the PRC, the term of the JV Company will be 20 years from the date of issuance of the business license to the JV Company.

According to the JV Agreement, the interest of Party A, New Honest and Party C in the JV Company will be 42 per cent., 38 per cent. and 20 per cent. respectively. The total investment of the JV Company shall be RMB49.8 million (approximately HK$47.0 million), of which RMB40.0 million (approximately HK$37.7 million) shall be contributed in form of registered capital and RMB9.8 million (approximately HK$9.2 million) shall be contributed in form of shareholders’ loan. The parties to the JV Agreement shall contribute their proportionate shares of interest in the JV Company in cash pursuant to the JV Agreement. The registered capital shall be paid by the parties to the JV Agreement within six months after the issuance of the business license to the JV Company by the relevant government authorities.

The funding of RMB18.924 million (approximately HK$17.853 million), comprising the registered capital of RMB15.2 million (approximately HK$14.3 million) and shareholders’ loan of RMB3.724 million (approximately HK$3.513 million), to be injected by New Honest into the JV Company will be funded by the internal resources of the Group.

In the event that any party fails to contribute its respective proportionate investment amount (including the registered capital and the shareholders’ loan) to the JV Company within 30 days after the stipulated time limit for such contribution (i.e. within six months after the issuance of the business license to the JV Company) as set out in the JV Agreement, the party in default will be liable to a daily penalty fee (equivalent to 0.1% of its proportionate investment amount calculated on a daily basis) to the other parties not in default and the other parties not in default shall have the rights to terminate the JV Agreement and claim for losses and damages from the party in default to the JV Agreement. Pursuant to the Articles, in the event that the term of the JV Company expires or is early terminated, a liquidation committee will be set up by the board of the JV Company to liquidate the assets of the JV Company.

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LETTER FROM THE BOARD

Upon the establishment of the JV Company, the board of the directors of the JV Company will comprise three directors. Pursuant to the JV Agreement, each of Party A, New Honest and Party C will appoint one director to the board of directors of the JV Company respectively and the tenure of the appointment will be four years and subject to renewal. As the Group will hold 38 per cent. of the equity interest in the JV Company, the investment of the Group in the JV Company will be treated by way of equity accounting in the financial statements of the Group after completion of the JV Agreement. The Board expected that the investment will not have any adverse effect on the earnings, assets and liabilities of the Group.

山西省工商行政管理局 (Shanxi Province Administration for Industry and Commence) has issued a temporary business licence to the JV Company on 15 December 2004 for the period from 15 December 2004 to 15 June 2005. The formal business licence of the JV Company will be issued by the relevant government authorities in due course.

INFORMATION ON THE JV COMPANY AND ITS SHAREHOLDERS

Party A, a company established in the PRC on 27 October 1997 with limited liability, is primarily engaged in production and sales of coking-coal products.

New Honest is a company incorporated on 5 March 2003 in the British Virgin Islands with limited liability and is wholly owned by the Company for the purpose of entering into the JV Agreement and the Articles and holding its investment in the JV Company. Since its incorporation, New Honest has not carried on any business other than the entering into the JV Agreement and the Articles.

Party C, a company established in the PRC on 11 December 1995 with limited liability, is primarily engaged in acting as agency for import and export and sales of coal products and machineries.

The JV Company is expected to be principally engaged in the production and sales of coking coal products. The JV Company will set up a coking coal plant with a maximum annual production capacity of 400,000 tonnes coking coal. It is expected that the plant will have water-cleaning, chemical and coking workshops. The coking coal produced by the plant will be sold in the domestic market of the PRC and exported to overseas countries.

REASONS FOR THE INVESTMENT

The Group is principally engaged in production and sales of coking coal products and side products, acting as an agent in the coal business and sales and marketing of gold jewellery products.

In addition to the further acquisition of 20 per cent. shareholding of 金山能源有限 責任公司 (Jinshan Energy Group Limited), being a subsidiary of the Company, which formed another joint venture company to engage in the production and sales of coking coal products in Gu Jiao Shi, Shanxi, the PRC, in May 2004, the Board is of the view that the formation of the JV Company in Ziao Yi Shi, Shanxi, the PRC, is in line with the business strategy of the Group investing in the coal industries and represents an excellent opportunity for the Company to further invest in an unique business with vast market potential.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information contained in the appendix to this circular.

By Order of the Board SO KWOK HOO Executive Director

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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 Group. The Directors jointly and severally accept responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable inquiries and that to the best of their knowledge and belief there are no other facts the omission of which would made any statement therein misleading.

2. DISCLOSURE OF INTERESTS

Interests of Directors in the Company

As at the Latest Practicable Date, the interests of the Directors in the share capital of the Company which 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 which they were taken or deemed to have under such provisions of the SFO), or were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

Long position in Shares

	Nature of	Number of	Percentage of
Name	Interest	Shares	shareholding
Mr. Wong Lik Ping	Personal interests	90,750,000	4.36 per cent.
Mr. Wong Lik Ping	Corporate interests	1,149,200,000	55.23 per cent.
	(Note)

Note: Mr. Wong Lik Ping is the beneficial owner of the entire issued share capital of China Merit Limited, which owned 1,149,200,000 Shares as at the Latest Practicable Date.

Directors’ interests in associated corporation

	Name of
	associated		Number of	Percentage of
Name	corporation	Capacity	shares	shareholding
Mr. Wong Lik Ping	China Merit	Beneficial	100 ordinary	100 per cent.
	Limited	Owner	shares

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APPENDIX

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or any chief executive of the Company had an interest or short position in any shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which would have 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 he was taken or deemed to have under such provisions of the SFO) or which was required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules to be notified to the Company and the Stock Exchange.

Interests of substantial Shareholders in the Company

So far as is know to the Directors, as at the Latest Practicable Date, the persons other than a Director or chief executive of the Company who has an interest or short position in the shares and 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 recorded in the register kept by the Company pursuant to Section 336 of the SFO, who is expected, directly or indirectly, to be interested in 5 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group or had any options in respect of such capital, were as follows:

Name of		Number of	Percentage of
Shareholder	Capacity	Shares	shareholding
China Merit Limited	Beneficial Owner	1,149,200,000	55.23 per cent.

Note: Mr. Wong Lik Ping is the beneficial owner of the entire issued share capital of China Merit Limited, which owned 1,149,200,000 Shares as at the Latest Practicable Date.

Save as disclosed above, the Directors and the chief executive of the Company were not aware that there was any person (other than a Director or chief executive of the Company) who, as at the Latest Practicable Date, had an interest of short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other member of the Group or had any options in respect of such capital.

Interests in other members of the Group

As at the Latest Practicable Date, so far as is known to the Directors, there was no person (other than a Director or chief executive of the Company) who was, directly or indirectly, interested in 5 per cent. or more of the nominal value of the share capital carrying rights to vote in all circumstances at general meetings of any subsidiary of the Company.

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APPENDIX

GENERAL INFORMATION

Service contracts

There is no existing or proposed service contract between any of the Directors and the Company or any of its members which is not terminable within one year without payment of compensation (other than statutory compensations) and no service contract has been entered into or amended within six months before 5 January 2005, being the date of this circular.

Interests in other competing business

Each of the Directors has confirmed that he and their respective associates (as defined under the Listing Rules) do not have any interests in a business apart from the Group’s business which directly competes with and will have material adverse impact on the Group.

3. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

4. GENERAL

• (a) The secretary and qualified accountant of the Company is Lam Lin Chu, HKICPA.

• (b) The registered office of the Company is situated at 12th Floor, Kwan Chart Tower, No. 6 Tonnochy Road, Wanchai, Hong Kong.

• (c) The Hong Kong share registrar of the Company is Tengis Limited, Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

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