L.K. Technology Holdings Limited — Proxy Solicitation & Information Statement 2008

Sep 8, 2008

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 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 or transferred all your shares in the Company, you should at once hand this circular to the purchaser or the 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.

力勁科技集團有限公司

L.K. Technology Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 558)

DISCLOSEABLE TRANSACTION IN RELATION TO ENTERING INTO OF THE SUPPLEMENTAL INVESTMENT AGREEMENT

9 September 2008

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
APPENDIX – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

DEFINITIONS

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

“Additional Investment” an additional investment in Li Chang with an amount of RMB10 million (equivalent to approximately HK$11.4 million) to be made by Lida pursuant to the Supplemental Investment Agreement

• “Board” the board of Directors “Company” L.K. Technology Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the main board of the Stock Exchange

• “connected person(s)” has the meanings ascribed to it under the Listing Rules “Director(s)” the director(s) of the Company “Further Investment” further investment in Li Chang by Lida and Jin Da respectively with an aggregate amount of RMB50 million (equivalent to approximately HK$57 million) pursuant to the Supplemental Investment Agreement

• “Group” the Company and its subsidiaries “Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Investment Agreement”	the investment agreement dated 1 April 2008 and
	entered into between Lida and Jin Da which set out
	the principal terms for the establishment of Li Chang
“Jin Da”	阜新金達鋼鐵鑄造有限公司(“Fuxin Jin Da Steel
	Casting Company Limited”), a company incorporated
	in the PRC and an independent third party. It is
	principally engaged in iron ore mining and steel
	casting
“Latest Practicable Date”	4 September 2008, being the latest practicable date
	prior to the printing of this circular for ascertaining
	certain information for inclusion in this circular

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DEFINITIONS

“Li Chang”	阜新力昌鋼鐵鑄造有限公司(“Fuxin Li Chang Steel &
	Iron Foundry Co., Ltd.”), a company incorporated in
	the PRC with limited liability pursuant to the
	Investment Agreement and owned as to 35% by Lida
	and as to 65% by Jin Da
“Lida”	阜新力達鋼鐵鑄造有限公司(“Fuxin Lida Steel Casting
	Co. Ltd.”), a wholly foreign owned enterprise
	incorporated in the PRC indirectly wholly owned by
	the Group and principally engaged in the production
	of cast iron/steel cast components
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“PRC”	the People’s Republic of China, which for the purpose
	of this circular excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan
“Shareholder(s)”	the holder(s) of the ordinary share(s) of HK$0.10 each
	in the issued share capital of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Supplemental Investment	the supplemental investment agreement dated 23
Agreement”	August 2008 and entered into between Lida and Jin
	Da in relation to the Additional Investment and the
	Further Investment
“Transferred Assets”	assets to be transferred by Jin Da to Li Chang as the
	consideration of its 65% investment in Li Chang, the
	value of which was determined by the asset valuation
	conducted by an independent valuer
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“km2”	square kilometer
“RMB”	Renminbi, the lawful currency of the PRC
“%”	per cent.

Unless otherwise specified in this circular, amounts denominated in RMB have been converted, for the purpose of illustration only, into HK$ at a rate of RMB1.00 to HK$1.14.

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LETTER FROM THE BOARD

力勁科技集團有限公司 L.K. Technology Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 558)

Executive Directors: Ms. Chong Siw Yin (Chairperson) Mr. Cao Yang (Chief Executive Officer) Mr. Liu Zhao Ming Mr. Chung Yuk Ming

Registered Office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Independent Non-executive Directors:

Dr. Low Seow Chay Dr. Hon. Lui Ming Wah, SBS, JP Mr. Tsang Yiu Keung, Paul Mr. Chan Wah Tip, Michael

Principal Place of Business in Hong Kong: Unit A, 8th Floor Mai Wah Industrial Building 1–7 Wah Sing Street Kwai Chung New Territories Hong Kong

9 September 2008

To the Shareholders

Dear Sir/Madam,

DISCLOSEABLE TRANSACTION IN RELATION TO ENTERING INTO OF THE SUPPLEMENTAL INVESTMENT AGREEMENT

INTRODUCTION

On 23 August 2008, Lida, an indirectly wholly-owned subsidiary of the Company, entered into the Supplemental Investment Agreement with Jin Da, an independent third party, pursuant to which Lida agreed to make the Additional Investment to Li Chang to maintain its 35% shareholding interest in Li Chang.

In addition, both parties to the Supplemental Investment Agreement agreed to make Further Investment in proportion to their respective shareholding interest in Li Chang.

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LETTER FROM THE BOARD

The Additional Investment and the Further Investment to be made by Lida to Li Chang pursuant to the Supplemental Investment Agreement when aggregated with the initial investment in Li Chang made by Lida pursuant to the Investment Agreement constitutes a discloseable transaction for the Company pursuant to Rule 14.06(2) of the Listing Rules.

The purpose of this circular is to provide you with further information in relation to the Supplemental Investment Agreement. The details of the Supplemental Investment Agreement are set out below.

THE SUPPLEMENTAL INVESTMENT AGREEMENT

Date: 23 August 2008

Parties:

• (1) Lida, an indirectly wholly-owned subsidiary of the Company; and

• (2) Jin Da

To the Directors’ best knowledge, information and belief having made all reasonable enquiries, Jin Da is independent of the Company and its connected persons.

Subject matters:

• (1) Lida agreed to make the Additional Investment within 10 days to Li Chang upon the issuance of the capital verification report by authorized verification institution in the PRC.

The Additional Investment amounted to RMB10 million (equivalent to approximately HK$11.4 million), which was arrived at after arm’s length negotiations between the parties to the Supplemental Investment Agreement in consideration of the value of the Transferred Assets as estimated by an independent professional valuer appointed by Jin Da in July 2008 and the contribution made by Jin Da including, among other things, time and efforts devoted in obtaining approvals from local authorities and other relevant preparatory work at the initial stage of the establishment of Li Chang.

• (2) Both parties to the Supplemental Investment Agreement agreed to make the Further Investment in proportion to their respective shareholding interest in Li Chang. Accordingly, each of Lida and Jin Da shall make Further Investment in Li Chang with an amount of RMB17.5 million (equivalent to approximately HK$19.95 million) and RMB32.5 million (equivalent to approximately HK$37.05 million) respectively within 20 days following completion of the Additional Investment by Lida.

The Further Investment with an aggregate amount of RMB50 million (equivalent to approximately HK$57 million) was determined in consideration of the estimated capital requirement for the expansion of Li Chang’s production capacity.

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LETTER FROM THE BOARD

The Additional Investment and the Further Investment to be made by Lida shall be paid in cash and be financed by internal resources of the Group.

INFORMATION OF LI CHANG

Li Chang was established to engage in iron ore mining and smelting. As at the Latest Practicable Date, the production facilities of Li Chang were still under construction and Li Chang did not record any revenue nor, save for the cost incurred for its incorporation, any major expense. As at 25 August 2008, Li Chang had unaudited consolidated net asset value of approximately RMB120 million (equivalent to approximately HK$136.8 million).

In May 2008, Li Chang entered into an agreement with the 4th Geological Team of Liaoning Province, an independent third party affiliated to Bureau Geology and Mineral Resources Exploration Liaoning Province, the PRC, in relation to the transfer of the exploration rights of Sheng Bao Ying Zi Mine which is located in the northern part of Sheng Bao Ying Zi Village, Fu Xing Di Town, Fu Meng County, Liaoning Province at the consideration of RMB15 million (equivalent to approximately HK$17.1 million). Li Chang intends to apply for the relevant mining right and expects to obtain it in 2009, subject to the grant of approvals by relevant PRC authorities.

According to the survey report of Sheng Bao Ying Zi Mine prepared by the 4th Geological Team of Liaoning Province in July 2007, Sheng Bao Ying Zi Mine covers an aggregate exploration area of approximately 10.14 km[2] and the resources of iron of Sheng Bao Ying Zi Mine are expected to be 754,636 tones, subject to further explorations.

REASONS FOR AND BENEFITS OF ENTERING INTO OF THE SUPPLEMENTAL INVESTMENT AGREEMENT

The Group is principally engaged in the design, manufacture and sale of die-casting machines and plastic injection moulding machines. The Directors consider it important to the Company’s profitability to ensure the stability of the supply of iron and steel, the raw material for the Group’s cast components manufacturing. To secure a stable source of iron and steel, the Group has endeavored to strengthen its integrated operation both vertically and horizontally, including but not limited to the investment in Li Chang.

Pursuant to the Investment Agreement, the initial total investment in Li Chang amounted to RMB113.69 million (equivalent to approximately HK$129.61 million), among which, (a) Jin Da shall contribute its 65% investment by transferring the Transferred Assets, including, among other things, 2 blast furnaces, 4 shaft furnaces, several properties and land use rights, to Li Chang, the value of which as at 31 December 2007 was then estimated to be RMB73.69 million (equivalent to approximately HK$84.01 million) by Lida and Jin Da, which was a preliminary estimation based on the knowledge of both parties after consultation with relevant experts; and (b) Lida shall contribute its 35% investment of RMB40 million (equivalent to approximately HK$45.6 million) in cash.

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LETTER FROM THE BOARD

However, the value of the Transferred Assets was ultimately valued at RMB85.76 million (equivalent to approximately HK$97.77 million) according to the valuation conducted by an independent professional valuer in July 2008, which resulted in the difference in the valuation amount of the Transferred Assets. The Additional Investment to be made by Lida serves to maintain the 35% shareholding of its interest in Li Chang.

The Directors also consider that the Further Investment to be made by both Lida and Jin Da helps to expand the operation scale and the production capacity of Li Chang and to provide additional general working capital to Li Chang.

Taking into account the aforesaid, the Directors consider that the terms of the Supplemental Investment Agreement in relation to the Additional Investment and the Further Investment are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

FINANCIAL EFFECT OF THE INVESTMENT

Li Chang will be treated as an associate of the Group and will be accounted for using the equity method of accounting. There will be no material change to the total assets and total liabilities of the Group. The Directors consider that there will be no significant impact on the earnings of the Group immediately upon the entering into of the Supplemental Investment Agreement.

GENERAL

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

By Order of the Board L.K. Technology Holdings Limited Chong Siw Yin Chairperson

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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 collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm that, having made all reasonable enquiries, to the best of their knowledge and belief:

• (a) the information contained in this circular is accurate and complete in all material respects and not misleading;

• (b) there are no other matters the omission of which would make any statement in this circular misleading; and

• (c) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

2. DISCLOSURE OF INTERESTS

(a) The Directors’ interests and short position in the shares, underlying shares and debentures of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of Securities and Futures Ordinance (“SFO”)) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of SFO (including any interests which 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 Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) in the Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

Interests in the shares of the Company

				Approximate
	Name of		Number of	percentage
Name of director	company	Capacity	shares held	of shareholding
Ms. Chong Siw Yin	the Company	See Note (1)	750,000,000(1)	74.1%
(“Ms. Chong”)			Long position
	the Company	Beneficial owner	3,000,000(2)	0.3%
			Long position

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APPENDIX

GENERAL INFORMATION

				Approximate
	Name of		Number of	percentage
Name of director	company	Capacity	shares held	of shareholding
Mr. Cao Yang	the Company	Beneficial owner	1,000,000	0.1%
			Long position
			2,000,000(2)	0.2%
			Long position
Mr. Liu Zhao Ming	the Company	Beneficial owner	3,000,000(2)	0.3%
			Long position
Mr. Chung Yuk Ming	the Company	Beneficial owner	1,000,000	0.1%
			Long position
			2,000,000(2)	0.2%
			Long position

Notes:

1. These 750,000,000 shares are owned by Girgio Industries Limited (“Girgio”). Girgio is owned as to 95% by Fullwit Profits Limited (“Fullwit”) as trustee of The Liu Family Unit Trust and 5% by Mr. Liu Siong Song (“Mr. Liu”). Fullwit is wholly-owned by Ms. Chong. Ms. Chong is deemed interested in the shares held by Girgio through Fullwit.

2. Such interest in shares is held pursuant to options granted under the pre-IPO share option scheme of the Company, which was adopted pursuant to a written resolution of the sole shareholder of the Company passed on 23 September 2006.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had registered any interest or short position in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) 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, or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

• (b) Persons who have an interest or short position in the shares or underlying shares which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial shareholders of the Company

As at the Latest Practicable Date, so far as is known to the Directors after making such enquiries as the Directors consider necessary, the following persons (other than the Directors and chief executive of the Company) 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, or were, directly or indirectly, interested in 10% or more of the nominal value of any

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APPENDIX

GENERAL INFORMATION

class of share capital carrying rights to vote in all circumstances at general meetings of the Company or any of its subsidiaries:

Interests in the shares of the Company

			Approximate
		Number of	percentage
Name	Capacity	shares held	of shareholding
Girgio	Beneficial owner	750,000,000(1)	74.1%
		Long position
Mr. Liu	See Note (2)	750,000,000(2)	74.1%
		Long position
		3,000,000(2)	0.3%
		Long position
Fullwit	See Note (1)	750,000,000(1)	74.1%
		Long position
HSBC International	See Note (3)	750,000,000(3)	74.1%
Trustee Limited		Long position
The Hamon Investment	Investment	71,220,000	7.0%
Group Pte Limited	manager	Long position
The Bank of New York	Interest of a controlled	60,242,500	6.0%
Mellon Corporation	corporation	Long position

Notes:

1. These 750,000,000 shares are owned by Girgio. Girgio is owned as to 95% by Fullwit as trustee of The Liu Family Unit Trust and 5% by Mr. Liu. Fullwit is wholly-owned by Ms. Chong.

2. Mr. Liu is the spouse of Ms. Chong and deemed interested in the shares held by Ms. Chong. Besides, Mr. Liu holds 5% interest in Girgio.

3. HSBC International Trustee Limited is the trustee of The Liu Family Trust. The Liu Family Trust was established by Mr. Liu on 22 February 2002 as an irrevocable discretionary trust for the benefit of Ms. Chong and the children of Mr. Liu and Ms. Chong. HSBC International Trustee Limited as trustee of The Liu Family Trust owns 99.9% of the units issued under The Liu Family Unit Trust and Ms. Chong owns the remaining 0.1% of the units.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors or chief executive of the Company knew of any other person (not being a director 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, 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 meetings of any other member of the Group or held any option in respect of such capital.

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APPENDIX

GENERAL INFORMATION

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered, or proposed to enter, into any service contract with any member of the Group which is not expiring or may not be determinable by the relevant member of the Group within a year without payment of compensation (other than statutory compensation).

4. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

5. COMPETING INTERESTS OF DIRECTORS AND ASSOCIATES

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

6. GENERAL

• (a) The registered office of the Company is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.

• (b) The principal place of business of the Company is at Unit A, 8th Floor, Mai Wah Industrial Building, 1–7 Wah Sing Street, Kwai Chung, New Territories, Hong Kong.

• (c) The branch share registrar and transfer office of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited, Shops 1712 – 1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (d) The company secretary of the Company is Mr. Wong Kin Ming, an Associate of The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.

• (e) The qualified accountant of the Company is Mr. Yuen Chee Wing, a Fellow of The Association of Chartered Certified Accountants and an Associate of the Hong Kong Institute of Certified Public Accountants.

• (f) The English text of this circular shall prevail over their respective Chinese text, in the case of inconsistency.

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