Guoco Group Limited — Capital/Financing Update 2008

Jun 17, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular, 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 securities in Far East Hotels and Entertainment 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 the 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.

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FAR EAST HOTELS AND ENTERTAINMENT LIMITED

(Incorporated in Hong Kong under the Companies Ordinance) (Website: http://www.tricor.com.hk/webservice/00037)

(Stock Code: 0037)

DISCLOSEABLE TRANSACTION ACQUISITIONS OF PROPERTIES

This circular is provided for the information of the shareholders of Far East Hotels and Entertainment Limited only.

18 June 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1-2
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Principal Terms of Provisional Contract (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Principal Terms of Provisional Contract (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reasons for the Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Financial effect of the Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7-10

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DEFINITIONS

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

• “Acquisitions” the acquisitions of Property (A) and Property (B) respectively by Charm Empire and Bright Oriental

• “Announcement” the announcement issued by the Company dated 30 May 2008, in relation to, amongst others, the Acquisitions

• “Associate” has the meaning ascribed to it under the Listing Rules

• “Board” the board of Directors

• “Bright Oriental” Bright Oriental International Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company

• “Charm Empire” Charm Empire International Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company

• “Company” Far East Hotels and Entertainment Limited, a company incorporated in Hong Kong whose shares are listed on the main board of the Stock Exchange

• “Connected person” has the meaning ascribed to it under the Listing Rules

• “Directors” the directors of the Company

• “Group” the Company together with its subsidiaries

• “HK$”

• Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “Latest Practicable Date” 13 June 2008, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

• “Listing Rules”

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

• “PRC” the People’s Republic of China

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DEFINITIONS

• “Property (A)” Apartment No. 30 on the 17th Floor of Celestial Heights, Phase 1, Celestial Avenue, No. 80 Sheung Shing Street, Homantin (Kowloon Inland Lot No. 11124) which is under development

• “Property (B)” Apartment No. 33 on the 18th Floor of Celestial Heights, Phase 1, Celestial Avenue, No. 80 Sheung Shing Street, Homantin (Kowloon Inland Lot No. 11124) which is under development

• “Properties” Property (A) and Property (B)

• “Provisional Contract (A)” the provisional agreement dated 29 May, 2008 entered into between the Vendor and Charm Empire for the pre-sale of Property (A)

• “Provisional Contract (B)” the provisional agreement dated 29 May, 2008 entered into between the Vendor and Bright Oriental for the pre-sale of Property (B)

• “Provisional Contracts” Provisional Contract (A) and Provisional Contract (B)

• “SFO”

• the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Shareholder(s)” holder(s) of the share(s) of the Company

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

• “Vendor” Volly Best Investment Limited

• “%” per cent

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LETTER FROM THE BOARD

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FAR EAST HOTELS AND ENTERTAINMENT LIMITED

(Incorporated in Hong Kong under the Companies Ordinance) (Website: http://www.tricor.com.hk/webservice/00037)

(Stock Code: 0037)

Executive Directors: Deacon Te Ken Chiu (Chairman) Derek Chiu (Managing Director and Chief Executive) Desmond Chiu (Deputy Managing Director) Margaret Chiu

Registered & Principal Office: Suite 2308, 23/F, Office Tower, Convention Plaza, 1 Harbour Road Wanchai, Hong Kong

Non-executive Directors: Chiu Ju Ching Lan Dick Tat Sang Chiu Tan Sri Dato’ David Chiu Dennis Chiu Duncan Chiu

Independent non-executive Directors: Ip Shing Hing Ng Wing Hang Patrick Choy Wai Shek Raymond

Alternate Directors:

Chan Chi Hing (Alternate Director to Deacon Te Ken Chiu) Tang Sung Ki (Alternate Director to Desmond Chiu)

18 June 2008

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION ACQUISITIONS OF PROPERTIES

INTRODUCTION

Reference is made to the Announcement. Charm Empire and Bright Oriental (both being wholly-owned subsidiaries of the Company) entered into the Provisional Contracts with the Vendor for the Acquisitions on 29 May, 2008. The Provisional Contracts are provisional agreements for the pre-sale of units in phase 1 of the property development “Celestial Heights” at 80 Sheung Shing Street, Homantin, Kowloon which is developed by

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LETTER FROM THE BOARD

the Vendor. According to the pre-sale brochure, the anticipated completion date of the construction of the building in this development is 31 July, 2009 (subject to extension in circumstances specified in the formal sale and purchase agreement).

The Acquisitions constitute discloseable transaction on the part of the Company under Chapter 14 of the Listing Rules. The purpose of this circular is to provide information containing, among other things, details of the Acquisitions.

PRINCIPAL TERMS OF PROVISIONAL CONTRACT (A)

Date : 29 May, 2008 Parties : (a) Vendor: Volly Best Investment Limited (through its sales agent) (b) Purchaser: Charm Empire, a wholly-owned subsidiary of the Company

The Subject Property:

Property (A) comprises Apartment No. 30 on the 17th Floor of Celestial Heights, Phase 1, Celestial Avenue, No. 80 Sheung Shing Street, Homantin (Kowloon Inland Lot No. 11124) which is under development, which will have a gross floor area of 1,636 square feet.

Sale and Purchase:

Pursuant to the Provisional Contract (A), Charm Empire has an option but is not bound to purchase Property (A) unless and until the formal agreement for sale and purchase has been executed while the Vendor is bound to sell Property (A) to Charm Empire. Charm Empire shall enter into the formal agreement for sale and purchase in respect of Property (A) on or before 2 June, 2008. If Charm Empire fails to enter into such formal sale and purchase agreement by such date, the Vendor shall be entitled to forfeit the preliminary deposit of 5% of the purchase price paid by Charm Empire.

Charm Empire entered into the formal agreement for sale and purchase in respect of Property (A) on 2 June, 2008.

Purchase Price:

The Purchase Price of Property (A) is HK$15,869,000, and is the price set by the developer.

Terms of Payment of the Purchase Price:

• (a) a preliminary deposit of HK$793,450 was paid by Charm Empire upon signing of Provisional Contract (A);

• (b) HK$793,450 being part payment of the purchase price shall be paid on or before 28 June, 2008;

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LETTER FROM THE BOARD

• (c) HK$793,450 being a further part payment of the purchase price shall be paid on or before 27 August, 2008;

• (d) the balance of the purchase price of HK$13,488,650 shall be paid within 14 days of the date of notification by the Vendor to Charm Empire that the Vendor is in a position to validly assign Property (A) to Charm Empire.

PRINCIPAL TERMS OF PROVISIONAL CONTRACT (B)

Date : 29 May, 2008

• Parties : (a) Vendor: Volly Best Investment Limited (through its sales agent)

• (b) Purchaser: Bright Oriental, a wholly-owned subsidiary of the Company

The Subject Property:

Property (B) comprises Apartment No. 33 on the 18th Floor of Celestial Heights, Phase 1, Celestial Avenue, No. 80 Sheung Shing Street, Homantin (Kowloon Inland Lot No. 11124) which is under development, which will have a gross floor area of 1,636 square feet.

Sale and Purchase:

Pursuant to the Provisional Contract (B), Bright Oriental has an option but is not bound to purchase Property (B) unless and until the formal agreement for sale and purchase has been executed while the Vendor is bound to sell Property (B) to Bright Oriental. Bright Oriental shall enter into the formal agreement for sale and purchase in respect of Property (B) on or before 2 June, 2008. If Bright Oriental fails to enter into such formal sale and purchase agreement by such date, the Vendor shall be entitled to forfeit the preliminary deposit of 5% of the purchase price paid by Bright Oriental.

Bright Oriental entered into the formal agreement for sale and purchase in respect of Property (B) on 2 June, 2008.

Purchase Price:

The Purchase Price of Property (B) is HK$16,360,000, and is set by the developer.

Terms of Payment of the Purchase Price:

• (a) a preliminary deposit of HK$818,000 was paid by Bright Oriental upon signing of Provisional Contract (B);

• (b) HK$818,000 being part payment of the purchase price shall be paid on or before 28 June, 2008;

• (c) HK$818,000 being a further part payment of the purchase price shall be paid on or before 27 August, 2008;

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LETTER FROM THE BOARD

• (d) the balance of the purchase price of HK$13,906,000 shall be paid within 14 days of the date of notification by the Vendor to Bright Oriental that the Vendor is in a position to validly assign Property (B) to Bright Oriental.

REASONS FOR THE ACQUISITIONS

In view of recent property market conditions, the Directors consider that the Acquisitions are sound investment opportunities for the Group. The Directors believe that the Acquisitions will improve the Group’s operating performance and widen its asset base. The Directors are of the view that the Provisional Contracts are on normal commercial terms which are fair and reasonable and in the interests of the Company and its shareholders as a whole. The Group will hold the Properties as a long term investment.

FINANCIAL EFFECT OF THE ACQUISITION

It is expected that approximately 70% of the consideration for the Acquisitions would be funded by bank facilities secured by the grant of mortgage over the Properties and the remaining 30% by internal resources of the Group. Thus upon completion, the liabilities of the Group would increase in accordance with the amount of consideration funded by bank borrowings and the Group’s bank balance would decrease in accordance with the amount of consideration funded by internal resources of the Group.

GENERAL

The principal business activities of the Group are hotel operation, property letting, securities investment and trading and investment holding. Charm Empire and Bright Oriental are principally engaged in property investment.

To the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, the Vendor is indirectly owned by Cheung Kong (Holdings) Limited as to 90% and by Nan Fung Development Limited as to 10% and is principally engaged in property development, and the Vendor, Cheung Kong (Holdings) Limited and Nan Fung Development Limited are third parties independent of the Company and its connected persons.

As the applicable percentage ratios calculated under Chapter 14 of the Listing Rules in respect of the Acquisitions in aggregate exceed 5% but are less than 25%, the Acquisitions constitute discloseable transactions of the Company under Chapter 14 of the Listing Rules.

ADDITIONAL INFORMATION

Your attention is drawn to the “General Information” in the appendix to this circular.

Yours faithfully By order of the Board Derek Chiu Managing Director and Chief Executive

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GENERAL INFORMATION

APPENDIX

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 with regard to the Company and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement contained herein misleading.

2. DISCLOSURE OF INTERESTS

(1) Directors’ Interests

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO ) which were required (a) 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 they were taken or deemed to have under such provisions of the SFO) or (b) were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, were as follows:

(i) Long positions of Directors’ interests in shares of the Company

				Approximate	Approximate
					percentage
		Number of ordinary shares of the Company held			of issued share capital of
		Family	Corporate	Total	the
Name of director	Personal	interests	interests	interests	Company
Mr. Deacon Te Ken Chiu	12,491,424	–	108,901,052(1)	121,392,476	24.83%
Mr. Derek Chiu	12,394,000	–	78,430,299(2)	90,824,299	18.58%
Madam Chiu Ju Ching Lan	188,000	–	–	188,000	0.04%
Mr. Dick Tat Sang Chiu	12,172,800	–	22,277,033(3)	34,449,833	7.05%
Mr. David Chiu	3,144,627	–	–	3,144,627	0.64%
Ms. Margaret Chiu	676,240	–	5,000,000(4)	5,676,240	1.16%

Notes:

• (1) Of the 108,901,052 shares, (i) 100,939,842 shares were held by various private companies controlled by Mr. Deacon Te Ken Chiu of which 72,182,400 shares were held by Achiemax Limited; (ii) 295,210 shares were held by Far East Consortium Limited, a wholly-owned subsidiary of Far East Consortium International Limited; and (iii) 7,666,000 shares were held by Brentford Investments Inc., a wholly-owned subsidiary of Far East Holdings International Limited. Mr. Deacon Te Ken Chiu is a controlling shareholder of these companies.

• (2) The 78,430,299 shares were held by Energy Overseas Ltd., a company controlled by Mr. Derek Chiu.

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GENERAL INFORMATION

APPENDIX

• (3) The 22,277,033 shares were held by various private companies controlled by Mr. Dick Tat Sang Chiu.

• (4) The 5,000,000 shares were held by a private company controlled by Ms. Margaret Chiu.

(ii) Directors’ interests in share options of the Company

As at the Latest Practicable Date, there were no outstanding share options granted to the Directors or chief executive of the Company pursuant to the Company’s share option scheme.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor chief executive of the Company had interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including any interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listing Issuers.

(iii) Service contracts

None of the Directors had any existing or proposed service contracts with any member of the Group or any associated company of the Company as at the Latest Practicable Date.

(iv) Competing interest

As at the Latest Practicable Date, in so far as the Directors are aware, none of the Directors or their respective associates had any interest in a business which competes or is likely to compete with the business of the Group.

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GENERAL INFORMATION

APPENDIX

• (2) Substantial Shareholders’ Interests and Persons who have an Interest or Short Position which is Discloseable under Divisions 2 and 3 of Part XV of the SFO

Substantial Shareholders

Apart from the interests of certain Directors disclosed under the section headed “Directors’ Interests in Shares”, according to the register of interests maintained by the Company pursuant to Section 336 of the SFO and so far as was known to the Directors and chief executive of the Company, as at the Last Practicable Date, the following persons or corporations (other than a Director or chief executive of the Company) had an interest or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO or was, directly or indirectly, interested in 10% 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 in any options in respect of such capital.

	Number of	Percentage of
	ordinary	issued share
	shares of the	capital of the
Name of Substantial Shareholder	Company held	Company
Achiemax Limited (1)	72,182,400	14.77%
Energy Overseas Ltd.(2)	78,430,299	16.04%

Notes:

• (1) Mr. Deacon Te Ken Chiu and Mr. Dennis Chiu are directors of Achiemax Limited.

• (2) Energy Overseas Ltd. is a company controlled by Mr. Derek Chiu who is also its director.

Save as disclosed herein, as at the Latest Practicable Date and so far as is known to the Directors or chief executive of the Company, there was no other person (other than a director or chief executive of the Company) who had an interest or short positions in the Shares and underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any member of the Group or in any options in respect of such capital.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors was a director or employee of a company which had an interest or short position in the Shares and underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

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GENERAL INFORMATION

APPENDIX

3. LITIGATION

Neither the Company nor any other members of the Group was engaged in any litigation or arbitration of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened against any member of the Group as at the Latest Practicable Date.

4. GENERAL

• (a) The registered and principal office of the Company in Hong Kong is Suite 2308, 23rd Floor, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong.

• (b) The Company’s Hong Kong share registrar and transfer office is Tricor Standard Limited, 26/F., Tesbury Centre, 28 Queen’s Road East, Hong Kong.

• (c) The qualified accountant and Secretary of the Company is Mr. Tang Sung Ki, who is a member of the Hong Kong Institute of Certified Public Accountants and a fellow member of the Association of Chartered Certified Accountants.

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

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