Hang Seng Bank Limited — Proxy Solicitation & Information Statement 2006

Jan 20, 2006

THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, you should consult your stockbroker, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Fortune Telecom 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.

FORTUNE TELECOM HOLDINGS LIMITED 長遠電信網絡集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 110)

DISCLOSEABLE AND CONNECTED TRANSACTIONS in respect of Disposal of 46% Equity Interest in Synergy Pacifi c

20 January 2006

* For identifi cation purposes only

CONTENTS

		Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER FROM THE BOARD
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3.	Particulars of Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
4.	Particulars of Asset to be Acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
5.	Particulars of Asset to be Disposed of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
6.	Basis and Payment Terms of the Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
7.	Completion Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
8.	Reasons for the Benef ts of the Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
9.	Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
10.	Discloseable and Connected Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
11.	Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
APPENDIX – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		10

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DEFINITIONS

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

“Acquisition” the acquisition of 49% equity interest in Synergy Technologies by the Company from Well Force pursuant to the terms and conditions of the Agreement

“Agreement” the agreement dated 29 December 2005 entered into amongst the Company, Well Force, Synergy Pacifi c and Synergy Technologies in respect of the Restructuring, the Acquisition and the Disposal

• “Board”

“Board” board of Directors “Company” Fortune Telecom Holdings Limited, a company incorporated in Bermuda with limited liability, whose securities are listed on the Stock Exchange

• “Directors” directors of the Company (including independent non-executive directors)

• “Disposal” the disposal of 46% equity interest in Synergy Pacifi c via the procurement of the Company to Well Force pursuant to the terms and conditions of the Agreement

• “Group”

the Company and 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 16 January 2006, being the latest practicable date prior to the Date” printing of this circular for ascertaining certain information for inclusion in this circular

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “PDA” Personal Data Assistant “Restructuring” the restructuring, pursuant to which the Company shall buy and Synergy Pacifi c shall sell 5,100 shares, representing 51% of the entire issued share capital of Synergy Technologies at HK$1.00 per share, whilst Synergy Pacifi c shall sell and Well Force shall buy 4,900 shares, representing 49% of the entire issued share capital of Synergy Technologies at HK$1.00 per share

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	DEFINITIONS
“Shares”	ordinary share of HK$0.10 each in the share capital of the
	Company
“SFO”	The Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Synergy Pacif c”	Synergy Pacif c (Holding) Limited, a company incorporated in Hong
	Kong on 6 December 1994
“Synergy Technologies”	Synergy Technologies (Asia) Limited, a company incorporated in
	Hong Kong on 20 December 2000
“Well Force”	Well Force International Inc., a company incorporated in the British
	Virgin Islands

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LETTER FROM THE BOARD

FORTUNE TELECOM HOLDINGS LIMITED 長遠電信網絡集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 110)

Executive Directors: Lau Siu Ying (Chairman and C.E.O.) Luo Xi Zhi

Non-Executive Directors:

Fung Oi Ip, Alfonso Lo Wing Yat Chang Wing Seng, Victor[#] Liu Kwok Fai, Alvan[#] Fok Wai Ming, Eddie[#]

# Independent Non-Executive Director

Registered Offi ce: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal Offi ce in Hong Kong: Room 1505-7, Tower A, Regent Center, 63 Wo Yi Hop Road, Kwai Chung, New Territories, Hong Kong

20 January 2006

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS

1. INTRODUCTION

In an announcement of the Company dated 30th December 2005 published on 3 January 2006, the Company announces that on 29 December 2005, the Company, Well Force, Synergy Pacifi c and Synergy Technologies have entered into the Agreement, wherein the parties agreed to restructure Synergy Technologies on normal commercial terms and at par, so as to remove Synergy Pacifi c as the intermediate holding company of Synergy Technologies. The result of the Restructuring is such that Synergy Technologies shall be held directly as to 51% by the Company and as to 49% by Well Force. After such restructuring, the Company has also agreed to purchase and Well Force has agreed to sell its entire 49% equity interest in Synergy Technologies at a consideration of HK$2,032,000, such that on completion, the Company shall hold 100% equity interest in Synergy Technologies. Under the terms and conditions of the Agreement, Well Force has also agreed to purchase and the Company has agreed to procure the sale of 46% equity interest in Synergy Pacifi c to Well Force at a consideration of HK$2,032,349. Upon completion, whereupon the ultimate balance consideration of HK$349 would be paid by Well Force to the Company, the Company and Well Force shall respectively hold 5% and 95% equity interest in Synergy Pacifi c.

* For identifi cation purposes only

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LETTER FROM THE BOARD

As Synergy Pacifi c is a non-wholly owned subsidiary of the Company, Well Force, being a substantial shareholder of Synergy Pacifi c, is a connected person of the Company within the meaning of the Listing Rules. As such, the Restructuring, the Acquisition and the Disposal all constitute connected transactions of the Company and some of the percentage ratios are more than 2.5% but the consideration is less than HK$10 million, therefore subject to reporting and announcement requirements under Chapter 14A of the Listing Rules. In addition, as the applicable percentage ratios calculated under Chapter 14 of the Listing Rules in respect of the Disposal exceed 5% but less than 25%, the Disposal therefore constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

The purpose of this circular is to provide you further information regarding the Disposal which constitutes a discloseable transaction of the Company under the Listing Rules.

2. THE AGREEMENT

Date: 29 December 2005

Parties : (1) the Company (2) Well Force (3) Synergy Pacifi c

• (4) Synergy Technologies

Pursuant to the Agreement:

• (A) Synergy Pacifi c shall sell and the Company shall buy 5,100 shares, representing 51% of the entire issued share capital of Synergy Technologies at HK$1.00 per share, whilst Synergy Pacifi c shall sell and Well Force shall buy 4,900 shares, representing 49% of the entire issued share capital of Synergy Technologies at HK$1.00 per share;

• (B) Well Force shall sell and the Company shall buy 4,900 shares, representing 49% of the entire issued share capital of Synergy Technologies, at a total consideration of HK$2,032,000; and

• (C) the Company shall procure to sell and Well Force shall buy 11,093 shares in Synergy Pacifi c, representing 46% of the entire issued share capital of Synergy Pacifi c, at a total consideration of HK$2,032,349.

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LETTER FROM THE BOARD

3. PARTICULARS OF RESTRUCTURING

The Restructuring will be implemented in order to streamline the existing shareholding structure in order to facilitate the Acquisition and Disposal.

Immediately before the signing of the Agreement, the Company, through its wholly owned subsidiary Transaccess Technology Limited, and Well Force respectively own 51% and 49% of the entire issued share capital of Synergy Pacifi c, which directly holds 100% of the entire issued share capital of Synergy Technologies.

Upon completion of the Restructuring, the shareholding of Synergy Technologies shall be held directly as to 51% by the Company and as to 49% by Well Force. As such, the Restructuring does not affect the effective interest of the Company in Synergy Technologies. Given the ultimate unchanged shareholding ratio, the fact that such Restructuring related share transfers are done at par value and that such Restructuring related share transfers are concluded after arm’s length negotiations, the Restructuring is conducted on normal commercial terms.

4. PARTICULARS OF ASSET TO BE ACQUIRED

Synergy Technologies, a company incorporated by Synergy Pacifi c in December 2000 in Hong Kong, is principally and actively involved in the distribution business of mobile phones and PDAs.

Immediately before the signing of the Agreement, Synergy Technologies is owned indirectly as to 51% by the Company and indirectly as to 49% by Well Force. Prior to completion of the Agreement, Synergy Technologies is a subsidiary of the Company. Upon completion of the Agreement, the Company shall directly own 100% equity interest in Synergy Technologies.

The audited net profi ts before taxation and extraordinary items of Synergy Technologies for the year ended 31 March 2004 and 2005 amount to HK$36,054 and HK$939,297 respectively, whilst the audited net profi ts after taxation and extraordinary items for such periods amount to HK$29,783 and HK$732,464 respectively. Meanwhile, the book value of the total assets (excluding liabilities) of Synergy Technologies as at 31 March 2005 is approximately HK$47.28 million.

5. PARTICULARS OF ASSET TO BE DISPOSED OF

Synergy Pacifi c, a company incorporated in Hong Kong, is currently and principally involved in the distribution business of indoor wired/cordless phones, wireless networking, software development and VOIP products. Immediately before the signing of the Agreement, Synergy Pacifi c is owned indirectly as to 51% by the Company and directly as to 49% by Well Force. Upon completion of the Agreement, the Company shall indirectly own 5% equity in Synergy Pacifi c.

The audited consolidated net profi ts before taxation and extraordinary items of Synergy Pacifi c for the year ended 31 March 2004 and 2005 amount to HK$26,179 and HK$1,921,761 respectively, whilst the audited consolidated net results after taxation and extraordinary items for such periods amount to a loss of HK$363 and a gain of HK$1,500,203 respectively. Meanwhile, the book value of the total assets (excluding liabilities) of Synergy Pacifi c as at 31 March 2005 is approximately HK$55.73 million.

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LETTER FROM THE BOARD

6. BASIS AND PAYMENT TERM OF THE CONSIDERATION

• (A) The respective considerations for the Acquisition and the Disposal under the Agreement are HK$2,032,000 and HK$2,032,349 respectively and they are to be set off against each others with the remaining difference balance of HK$349 to be payable by Well Force to the Company in cash on completion of the Agreement, the same of which shall be used as the Company’s internal funds. The respective considerations for the Acquisition and the Disposal have been arrived at after arm’s length negotiations amongst the parties and on normal commercial terms after taking into account the respective existing operating results, earning capacity, future growth prospects, overall fi nancial performances and net asset values of Synergy Pacifi c and Synergy Technologies as at 31st August 2005 as the parties to the Agreement started to negotiate the transactions hereunder from such date. The Directors consider the considerations to be fair and reasonable so far as the Company and its shareholders as a whole are concerned.

• (B) In fact, the Group has acquired 51% equity interest in Synergy Pacifi c at a consideration of HK$9.4 million in July 2001. Since that historical acquisition date, Synergy Pacifi c has declared a total dividend of approximately HK$17.4 million, to the extent that approximately HK$8.874 million thereof has already been distributed to the Group. As a result, the Group has only, in effect, paid up approximately HK$526,000 towards its historical acquisition of its 51% equity interest in Synergy Pacifi c. Pursuant to the Agreement, the Company is selling 46% equity interest in Synergy Pacifi c at the consideration of HK$2,032,000, which valuation of consideration the Directors fi nd reasonable and acceptable in the interests of the Company and its shareholders as a whole. As such, the gain which shall accrue to the Company in connection with the Disposal will amount to approximately HK$1,557,568, whilst the Group will still hold a remaining 5% equity interest in Synergy Pacifi c upon completion of the Disposal.

7. COMPLETION DATE

Completion of the Agreement shall take place within 14 days after the conditions as set out in the Agreement have been satisfi ed. Such conditions are as follows:-

• (i) that each of the parties in the Agreement shall have obtained valid board resolutions approving the transactions contemplated under the Agreement;

• (ii) that the Company shall have used its best endeavours to procure that the Agreement complies with the requirements of the Stock Exchange; and

• (iii) that the legal due diligence on Synergy Pacifi c and Synergy Technologies be duly satisfi ed by Well Force and the Company respectively.

Upon completion of the Restructuring, the Acquisition and the Disposal, Synergy Technologies and Synergy Pacifi c will be owned as to 100% and as to 5% by the Company respectively. As a result, Synergy Pacifi c will cease to be a subsidiary of the Company whilst Synergy Technologies will become a wholly owned subsidiary of the Company.

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LETTER FROM THE BOARD

8. REASONS FOR AND BENEFIT OF THE TRANSACTIONS

The Group is a distributor, retailer and value added services provider of mobile phones, PDAs, MP3 and wireless broadband communication solutions in the People’s Republic of China and Hong Kong. Well Force is an investment holding company.

Notwithstanding the Group’s diversifi ed business scope within the industry of wireless communications, it has always maintained a key focus in the distribution business of mobile phones and PDAs. Currently, it is within the Group’s strategy and mission to strengthen its focus line of businesses, such that it could release resources for deployment in a more effi cient and effective way. All the Directors consider that the transactions under the Agreement are in line with the Group’s current business model and strategy. Accordingly, all the Directors, including the independent non-executive Directors, consider that the Agreement, which is on normal commercial terms, is in the interest of the Company and its shareholders as a whole and that the terms and conditions of the Agreement are fair and reasonable so far as the Company and its shareholders as a whole are concerned.

Subsequent to completion of the Disposal, the Group will cease to record in its consolidated balance sheet the net asset value in Synergy Pacifi c as a subsidiary of the Group, which amounted to approximately HK$23 million as at 30th June 2005 based on the unaudited interim accounts of the Group for the 6 months ended 30th June 2005.

9. DIAGRAMS

Existing Shareholding of Synergy Pacifi c and Synergy Technologies

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----- Start of picture text -----

The Company
100%
Transaccess
Well Force
Technology Limited
51% 49%
100%
Synergy Pacific
100%
Synergy Technologies
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LETTER FROM THE BOARD

Shareholding Structure of Synergy Technologies after Restructuring

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----- Start of picture text -----

The Company Well Force
51% 49%
Synergy Technologies
----- End of picture text -----

Shareholding Structure of Synergy Technologies after Acquisition

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----- Start of picture text -----

The Company
100%
Synergy Technologies
----- End of picture text -----

Shareholding Structure of Synergy Pacifi c after Disposal

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----- Start of picture text -----

The Company Well Force
5% 95%
Synergy Pacific
----- End of picture text -----

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LETTER FROM THE BOARD

10. DISCLOSEABLE AND CONNECTED TRANSACTIONS

As Synergy Pacifi c is a non-wholly owned subsidiary of the Company, Well Force, being a substantial shareholder of Synergy Pacifi c, is a connected person of the Company within the meaning of the Listing Rules. Hence, both the Acquisition and the Disposal constitute connected transactions of the Company and some of the percentage ratios are more than 2.5% but the consideration is less than HK$10 million, therefore subject to reporting and announcement requirements under Chapter 14A of the Listing Rules. In addition, as the applicable percentage ratios calculated under Chapter 14 of the Listing Rules in respect of the Disposal exceed 5% but less than 25%, the Disposal therefore constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

11. ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendix to this circular.

Yours faithfully, By Order of the Board of FORTUNE TELECOM HOLDINGS LIMITED Lau Siu Ying

Chairman and Chief Executive Offi cer

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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 and confi rm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the interests and short positions held by the Directors and 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 (a) were required to be notifi ed 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 maintained by the Company referred to therein (the “Register”); or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notifi ed to the Company and the Stock Exchange, were as follows:

Interest in the Shares

			Approximate
			% of total
		Number of	issued Shares of
Name of Director	Nature of Interest	Shares Held	the Company
Mr. Lau Siu Ying	Family Interest_(Note 1)_	211,500,013	70
Note:

1. 211,500,013 Shares are held by Future 2000 Limited, which is wholly-owned by Mr. Lee Wai, Timothy as trustee of The Lau’s Family Trust (being a discretionary trust) of which Mr. Lau Siu Ying, his spouse and their two children are the current eligible beneficiaries but who do not have a fixed interests in the assets of the Lau’s Family Trust. Mr. Lau Siu Ying is interested in through being one of the eligible beneficiaries of The Lau’s Family Trust. Pursuant to the SFO, he is also deemed to be interested in the interests of his wife and two children who are also the eligible beneficiaries under The Lau’s Family Trust.

2. 10 -

GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS

• (a) As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, the parties (other than Directors or chief executive of the Company) who had an interest or short position in the Shares or 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 were as follows:

Interest in the Shares

			Approximate
			% of total
Name of		Number of	issued Shares
Substantial Shareholders	Nature of Interest	Shares held	of the Company
Future 2000 Limited	benef cial interest	211,500,013	70
(Note 1)
Mr. Lee Wai, Timothy	interest of controlled	211,500,013	70
(Note 2)	corporation

Notes:

1. Future 2000 Limited is wholly-owned by Mr. Lee Wai, Timothy as trustee of The Lau’s Family Trust (being a discretionary trust) of which Mr. Lau Siu Ying, his spouse and their two children are the current eligible beneficiaries but who do not have a fixed interests in the assets of the Lau’s Family Trust.

2. Under the SFO, Mr. Lee Wai, Timothy is deemed to have interests in the Shares which Future 2000 Limited has interests as he is entitled to exercise more than one-third of the voting power at general meetings of Future 2000 Limited.

3. (b) As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, the parties (other than Directors or chief executive of the Company) who was interested, directly or indirectly, in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

Interest in the shares in members of the Group

Name of members Name of Substantial Approximately % of the Group Shareholders of shareholding Synergy Technologies Fong Kin Kiu 11

• 11 -

GENERAL INFORMATION

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, the Directors or chief executive of the Company were not aware of any person (other than a Director or chief executive of the Company and the respective companies controlled by them whose interests have been disclosed above) who had an interest or short position in the Shares or 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 who was interested, directly or indirectly, in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

4. DIRECTORS’ SERVICE CONTRACT

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which does not expire or is not determinable by the relevant member of the Group within one year without payment of compensation (other than statutory compensation).

5. DIRECTORS’ INTEREST IN ASSETS/CONTRACTS

• (a) None of the Directors was materially interested in any contract or arrangement subsisting as at the Latest Practicable Date which is signifi cant in relation to the business of the Group.

• (b) As at the Latest Practicable Date, none of the Directors had any direct or indirect interests in any asset which had been acquired, or disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group, since 31st December 2004, the date to which the latest published audited consolidated fi nancial statements of the Group were made up.

6. LITIGATION

So far as the Directors are aware, as at the Latest Practicable Date, neither the Company nor any of its subsidiaries are engaged in any litigation or claim of material importance and no litigation or claim of material importance was pending or threatened against any member of the Group.

7. COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective associates were considered to have interest in any business which competes or may compete, either directly or indirectly, with the business of the Group pursuant to the Listing Rules.

8. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the fi nancial or trading position of the Group since 31st December 2004 (being the date to which the latest published audited accounts of the Group were made up).

• 12 -

GENERAL INFORMATION

APPENDIX

9. GENERAL

• (a) The secretary of the Company is Yuen Wai Ho, CPA, FCCA, ACIS, ACMA .

• (b) The qualifi ed accountant of the Company is Yuen Wai Ho, CPA, FCCA, ACIS, ACMA.

• (c) The registered offi ce of the Company is located at Clarendon House 2 Church Street Hamilton HM 11, Bermuda.

• (d) The share registrar of the Company in Hong Kong is Abacus Share Registrars Limited at 26/F Tesbury Centre 28 Queen’s Road East Wanchai Hong Kong.

• (e) The English language text of this circular shall prevail over the Chinese language text in case of inconsistency.

10. DOCUMENT AVAILABLE FOR INSPECTION

Copy of the Agreement will be available for inspection at the principal offi ce of the Company at Room 1505-7, Tower A, Regent Center, 63 Wo Yi Hop Road, Kwai Chung, New Territories, Hong Kong.

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